Daphne Donkin resigned from the headship of High Unsworth Infants School in October 1997, amid allegations about her management style.
But she claimed her only option was to leave after becoming the victim of a conspiracy.
However, in a unanimous conclusion, the tribunal found: 'Mrs Donkin failed to realise that it was her attitude which was affecting her relationship with staff.
It concluded that the situation had become so intolerable and the relationship between the head and staff so bad that 'staff were likely to resign thus causing immense problems to the teaching of children'.
A spokesman for the council said: 'We are please that the appeal has been dismissed and that the actions of the school governors and the LEA have been vindicated. Among its significant findings, the tribunal found the both governors and the LEA had provided Mrs Donkin with as much advice and support as they possibly could. The LEA would hope that the school can now move on from this difficult episode.'