New Park School in Wolverhampton gave the parents of all 107 pupils money to pay for Clarks shoes and a new uniform at the start of term.
The money has been taken from the pupil premium, a government grant which gives schools an annual fund for every child who is eligible for free school meals or looked after by the authority.
Eighty five per cent of pupils at the school in Cromer Gardens, Whitmore Reans, are eligible for the funding.
Schools get £1,300 for each primary aged pupil and £935 for every secondary aged pupil, with the money earmarked to help close the educational gap between disadvantaged children and their peers.
Ofsted guidance suggests the money is best invested in IT equipment or extra staff, but senior leaders at New Park say the new uniform will help 'improve discipline and engender pride' among pupils.
Nicola Davis, who took over as interim headteacher when her predecessor quit after a damning Ofsted report in February, said: "We are working hard to improve educational attainment at New Park School, and one way in which this is being achieved is through the introduction of a new school uniform for our pupils.
"Wearing a uniform has been shown to prepare pupils for learning and to raise standards.
"We recognise that pupils at New Park are from some of the most disadvantaged families in the city, and previously the majority did not wear a uniform. Therefore the school has taken the decision to supply uniforms to parents using funding from the Pupil Premium."
The move has been criticised by Wolverhampton City Council's conservative leader Councillor Wendy Thompson.
She said: "The funding is not meant to be used in this way. Improving educational achievement is vital in Wolverhampton, but this is nothing more than an abuse of the money."
Earlier this month children at two Black Country schools were sent home for not wearing the correct footwear.
New Park was plunged into special measures in February when an Ofsted inspection criticised staff for frequently man-handling pupils, while youngsters were seen smoking on site and fleeing school grounds during lessons.
As a result of the report a policeman was stationed at the school full time and Wolverhampton City Council spent £80,000 on a new exterior fence. A monitoring visit from the watchdog in May noted the school had made improvements under its new management regime.
The school takes pupils aged between seven and 16, all of whom have behavioural, emotional and social difficulties.