News that Coulsdon High School was advising parents of its intention to reduce its teaching timetable from next September intensified calls between the council and the DfES.
The arrangements will ensure that all pupils receive a full timetable throughout the next school year - an outcome the council has been determined to achieve in spite of the funding shortfall.
Council leader Hugh Malyan: 'We were very disappointed that Coulsdon High School told parents it would be reducing schooling next term.
'This is contrary to our determination that children's education should not be interrupted. I have therefore instructed the director of education, David Sands, to inform the three Croydon schools whose budgets are not sufficient to maintain the current curriculum, that the council will underwrite a further increase in their deficit in order to ensure that children are not sent home next term.
'This means that neither Coulsdon, St Andrews nor Coloma will have any reason to take such a drastic step.
'We are taking this decision in the expectation that the government, on whom we depend to adequately resource our schools, will, in line with its public statements, deliver an acceptable financial settlement in the next financial year.'
Mr Malyan said that the council had been involved in 'very constructive discussions' with the DfES in recent weeks.
He added: 'I am confident that both ministers and their officials fully understand the problems Croydon has faced this year and that they are committed, as is the council, to ensuring that all schools in the borough are funded properly.
'Although it is never desirable to set a deficit budget I believe that in the exceptional circumstances that some of our schools are facing, it is entirely in the best interests of pupils and parents that we depart from convention on this occasion.
'The DfES are aware of the course of action we are proposing and support us in finding practical ways to resolve the difficult situation.'