The Government has given permission for Walsall Council to divert cash which was earmarked for two special schools into a secondary labelled a "health and safety hazard" by pupils.
Walsall was last week given £12 million to spend on upgrading facilities at Mary Elliot and Daw End Schools for children with disabilities.
The cash award, under a £1 billion Government funding pot for urgent projects, came weeks after pupils at Joseph Leckie School handed a DVD to Ministers highlighting "Dickensian" conditions at their school.
It featured rat-infested classrooms, fallen masonry and cramped conditions at the 66-year-old school. Education chiefs in Walsall say Joseph Leckie needs to be completely rebuilt at a cost of £25 million.
But they claim under Government plans to repair or rebuild every secondary school in the country, they have been told they will not receive funds until 2011. But the authority has now been told it is to be granted "special flexibility" to use a portion of the £12 million to make Joseph Leckie safe.
"The Government has confirmed that despite initially telling the council that the funds should be invested in the two special schools... it wants Walsall to have 'special flexibility'," said a spokesman for Walsall ' s education authority.
"It said this flexibility is not normally allowed for targeted capital fund projects but it will allow some of the funds to be shared with Joseph Leckie School."