Rebrandings may be commonplace in today's "marketised" ÖйúAƬ sector, but the launch this week of Thames Valley University's new title is more symbolic than most.

Few universities have had as tumultuous a history as the institution that was branded Britain's first "failing" university in 1998. It has struggled financially ever since, remaining on the ÖйúAƬ Funding Council for England's "at higher risk" list for 12 years - longer than any other institution.

More than a decade on, and as English universities stand on the brink of the most significant funding changes in decades, the newly renamed University of West London is hoping to put the most difficult aspects of its past behind it and enter a challenging new era on a sound financial footing.

TVU was formed from a collection of colleges, among them Ealing College of ÖйúAƬ, Thames Valley College of ÖйúAƬ, the London College of Music and Queen Charlotte's College of Health Care Studies. It achieved university status just one year after becoming the Polytechnic of West London in 1991. In the same year, TVU entered what was to be the most colourful and turbulent period in its history when its charismatic new vice-chancellor, Mike Fitzgerald, burst on to the scene.

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With spiky, peroxided hair and an earring, and as the country's youngest vice-chancellor, he certainly stood out among the sea of grey suits. This was a man who smoked Cuban cigarillos, who wore Armani, drove a car with the number plate M4TVU and had a sofa and a jukebox, but no desk, in his office.

According to those who worked with him at the time, he was also "seriously" well connected to New Labour. David Blunkett regularly phoned him and, in 1996, a young Tony Blair dropped in and was impressed by his style (it is said that Blair decided he must have a sofa in his own office after the visit).

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In 1996, Times ÖйúAƬ referred to Fitzgerald as the "self-proclaimed 'Kenneth Tynan of ÖйúAƬ'" after he became the first person ever to be quoted on the front page of the publication using a four-letter word. The "irrepressible" university leader was well known for his "linguistic orthodoxy, conformist dress sense and deep-rooted respect for ÖйúAƬ's longer-established ways of doing things", the tongue-in-cheek piece added.

But no one doubted that the former criminologist was clever, and he had plenty of ideas.

"One-to-one he was tremendous. He could box and cox with Paxman on Newsnight, he was very sharp," one academic who worked with him at the time remembers.

Fitzgerald was also well thought of at high levels within the sector. In 1996, the Committee of Vice-Chancellors and Principals elected him its vice-chair. Despite his idiosyncrasies, he was part of the Establishment.

All this meant that he soon developed a group of admirers, and Private Eye began a column about a "trendy" vice-chancellor that was reputedly based on his antics. Those who were less enamoured, meanwhile, referred to him as "The Celestial Earring".

On a 1996 visit to the gleaming new Paul Hamlyn Learning Resource Centre in Slough, designed by Richard Rogers, Blair asked: "Why, I wonder, can't every university be like TVU?" It seemed that TVU was going places. Sadly, the future prime minister's remark would later become laden with irony.

Fitzgerald attempted to bring in a series of major reforms. The changes happened so fast that, in the words of one employee, they set "everyone's head spinning".

His vision - one that was, arguably, ahead of its time - was of a "student-driven" university. On top of a fundamental reorganisation of the university's administrative staff, he set about establishing a "New Learning Environment", using "resource-based" learning as a substitute for traditional teaching.

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At the same time, the university faced a protracted and severe dispute with a powerful union branch over employment agreements. Between 1992 and 1998, there were only two years when the university's administrative procedures were not seriously disrupted by industrial action. This meant that "basic student assessment tasks were not being undertaken, deadlines were regularly missed, (and) marks were not returned", as the Quality Assurance Agency later reported.

By the summer of 1997, the university had descended into chaos. By some estimates, at one stage as many as 200,000 pieces of student work were left unmarked.

Peter McCaffery, who was dean of TVU's European, international and social sciences faculty at the time, gives his account of the era in The ÖйúAƬ Manager's Handbook (2004). It describes how students found themselves stuck in a bizarre catch-22 situation. Undergraduates could not be allocated a degree pathway without having a director of studies; but neither could they be allocated a director of studies without a degree pathway. Meanwhile, of the thousands of course timetables that were published, two-thirds were wrong. There were "misplaced assignments, missing exam marks, unregistered students and unknown class sizes".

All this came to a head when, in October 1997, a marking scandal at the university erupted on to the pages of The Sunday Times. Owing to administrative failures, students who had been due to take resits had not been given proper notice of the requirement. In an effort to correct the disadvantage engendered by the error, a senior manager instructed the university's resit boards to lower pass marks and let through students who had achieved marks of just 30-39 per cent. In fact, the plan was quickly overturned by the vice-chancellor, but the damage to the university's reputation had been done. TVU's governors were forced to call in the QAA, which conducted a special review of the university's processes and procedures.

The incident would only have affected a few students, but when the QAA review team arrived, they discovered far deeper problems. At an open meeting held as part of the inspection, attended by more than 100 staff, the floodgates opened.

The resulting report, published in 1998, was highly critical and led to Fitzgerald's resignation. The report described "major problems" with the registration, timetabling, validation, student support and assessment systems that were in place between 1996 and 1998. External examiners were "disgruntled and disbelieving". Some of their reports were considered by the auditors "to be serious indictments of the university as a degree- awarding body".

Staff relations were "very poor". Employees told QAA reviewers about "conflicting directives, rapid and unexplained policy changes, procedural confusion, a sense of estrangement between the managers and the rest of the staff, and a general lack of trust". A significant number expressed concerns that the level of assessment had been reduced to an extent that "had seriously jeopardised the standards of the resulting degrees".

The team concluded that the "massive (programme of) change, driven by the vice-chancellor ... subjected the institution, its staff and its systems, to stresses which it was not able to bear" and there had been "significant management failures". Academic standards "were and are under threat" and the auditors were not confident that the problems experienced in 1997 would not recur.

The national newspapers had a field day with the story of the "Blairite vice-chancellor brought low by high ambitions". Headlines included "Vice-chancellor quits the university that taught curry-making and kite-flying" and "A radical mission that ended in failure".

"TVU became known as the basket case," one academic recalls. "You're a superstar one minute; you are trashed the next."

In his book, McCaffery, who recently became deputy vice-chancellor at London Metropolitan University, uses the story of TVU as a case study of "what not to do" in implementing change. As universities wrestle with the question of how to do "more with less", he argues, it is difficult to fault the case that Fitzgerald made for change. But, according to McCaffery, he tried to do too much too quickly, the consultation process was inadequate, and change was imposed from the top down.

The notion of the "student-driven" university left some staff feeling threatened and the bad relationship with the academic unions was allowed to grow "into an increasingly bitter and acrimonious dispute that became ideological and personal as well as industrial in character" and that left "neither side covered ... in glory".

But McCaffery argues that the accusations of dumbing down were "a myth" and led to an unfair "demonisation" of the university.

One theory circulating at the time was that the QAA had been on the lookout for a university it could "make an example of". In 1999, Fitzgerald hit back on BBC Radio 4's On the Ropes, claiming that he and TVU had been "cynically used as part of a political agenda". Meanwhile, THE published claims that the report had been rushed and that the draft report had contained inaccuracies.

It was a difficult and demoralising time for staff. "A lot of the staff felt let down," recalls Malcolm Davies, head of the university's Ealing Law School. "It shows the strength of the university that we have managed to survive that (crisis), we have come out of it, and there is a new confidence."

Fitzgerald once told his staff: "Whatever we do at TVU, it will never be boring here" - an observation that certainly proved to be true.

"It took you to the limits of your physical and mental endurance," one academic recalls. But whatever else, he adds, Fitzgerald's reign "did bring colour, and the rest of the sector is very grey. Very grey indeed."

Unfortunately for the institution, the knock-on effects were felt for some time. Recruitment slumped in many subjects and the arrival of acting vice-chancellor Sir William Taylor saw the start of a wave of voluntary severance programmes that would be almost continuous over the next 10 years.

There were also major curriculum changes. In 1999, THE reported that when they were all complete: "TVU will barely resemble a university in the traditional sense ... First degrees in English, maths, history, physics, chemistry, languages and other traditional subjects will not be options." The university's strongest research centre, in linguistics, which achieved a 5 rating in the 1996 research assessment exercise, was transferred to King's College London.

Today, the university focuses entirely on vocational courses and the needs of industry, offering qualifications in business, computing, forensic science, health, hospitality, law, media, psychology and technology, as well as music, art and design.

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At the London School of Hospitality and Tourism, which has 2,000 students, qualifications range from a BA in international culinary arts - a current student is the TV chef Lorraine Pascale - to degrees in airline, airport and cruise ship management. Last year, the school, which has backing from celebrity chefs including Heston Blumenthal and Gary Rhodes, picked up a Queen's Anniversary Prize for Higher and Further Education for its work, and this week a former student, Laurence Geller, president of Strategic Hotels and Resorts, will be inaugurated as the university's new chancellor at an event celebrating the launch of the university's new name.

David Foskett, the school's head, joined the institution more than 30 years ago when it was part of Ealing Technical College. He says he is driven by the belief that vocational education is not secondary.

"This country does not value vocational education. We need to train people both intellectually and practically; the two go hand in hand. You need academic education to underpin democracy but you need vocational education to underpin the economy," he argues.

"West London has the greatest density of hospitality and tourism anywhere in the UK. That's what motivates me: there are jobs here for young people. Perhaps they haven't done so well at school because the curriculum is wrong. We're teaching them life skills, skills to succeed, to get a job, and the skills for lifelong learning."

Sheila McCallum, chair of the university's University and College Union branch, says staff commitment to vocational education dates back to the institution's origins. Byron House School was founded on the Ealing site in 1860 on the principles of Lady Noel Byron (1792-1860), who believed in schooling that combined academic and practical skills. "There are real roots in adult vocational education," says McCallum. Staff are also dedicated "to providing a very personal type of education. We try to know students by their names. That probably comes from the fact that we grew from an amalgamation of colleges. Some of the personalisation, the small-college feel, is still present within the university."

As a widening participation university, it has a diverse student body: 76 per cent are mature students and 53 per cent study part time. On a Saturday the university is as busy as it is on weekdays, with weekend classes for part-time students.

Even at the most difficult time for the institution, during the QAA's special review, the auditors' report notes that they were "constantly struck" by the dedication of the staff to the university's mission, which "permeated many of our meetings with staff at all levels".

"It is a tribute to the university's staff that its mission remains a source of inspiration despite the difficulties that many of them have faced in recent years," the report said. It claimed that "complete disaster was only averted by dint of (their) Herculean efforts".

According to Clare Beckett, head of recruitment, the difficult times led to a strong sense of camaraderie. "When you are the underdog, you have to work together so much. It is you against the rest of the world. There is that fighting spirit in staff to prove them all wrong, to show that we're better than at times we were perceived to be."

This autumn, the university is set to record a small surplus for the first time in years. It is an achievement that may sound modest, but it has been no small undertaking. It comes after a long period of restructuring and the loss of two of the university's campuses.

When Peter John, the current vice-chancellor, arrived in 2007, he announced a plan to make the institution "the foremost employer-engagement university in the UK". He soon discovered, however, that the university had to overcome a new set of difficulties.

In 2008, it emerged that the university, one of London's major nursing training providers, was on the brink of an NHS funding crisis. Hospitals had decided that the university's drop-out rates were too high and were threatening to withdraw ?18 million a year in funding.

The university also had a huge structural deficit. Although it had 16,000 full-time equivalent students, its campuses covered 100,000 square metres and stretched across 42 miles. "We needed an income of ?125 million to run that size of institution and our income was below ?110 million," says John. One building alone - the university's newest, Paragon House in Brentford, built under a private finance initiative - cost the university ?3 million a year to rent, and there was no break clause for 15 years.

TVU merged with Reading College and School of Arts and Design in 2004. Staff costs at the college were a massive 84 per cent of income. This pushed the university's overall staff costs up to 68 per cent. Too few students at the site were progressing from further education into ÖйúAƬ. Meanwhile, the Slough campus had just 600 students on seven acres.

That summer, matters got worse when Ofsted branded the university's further education provision at Reading as failing for the second time in four years. And then Hefce decided to examine the university's regulations on drop-outs and found that they did not match its own rules. The funding council insisted that a significant sum of money would have to be clawed back - ?8.3 million. It was, as John puts it, "a pretty difficult year".

With just a few years to prepare for what was set to be a radically different 2012 funding regime, some big decisions had to be made. "The university needed to be downsized, reshaped and relocated. We could not continue as we were and survive, that was quite clear," says John. A key goal was to ensure that, by 2011, the university would be financially sustainable, which John says means "making good surpluses of between 2 and 4 per cent". There was to be a new focus on improving retention, recruitment, the curriculum and quality.

While many universities have sought to expand in recent years, John adopted a different tactic. The university was to operate only in West London, not in the Thames Valley, and with a far smaller footprint.

In an interview in February 2008, John told THE that the university would develop the campus at Reading, but he later revised his plans. The decision to disinvest was taken in July 2009, and the partnership with Reading formally ended last summer. The Slough campus is also being closed. A programme of redundancies - predominantly voluntary - means that since November 2009, 211 staff have left the institution.

"We're now smaller - 11,000-11,500 full-time equivalent students, ?80 million income and 1,400 staff," says John. The size of the university's estate is now just over half the size it was when John arrived. This leaves two main campuses at Ealing and Brentford, with a small base in Reading for nursing set to open soon.

While the latest published accounts for the university show a deficit of ?7.6 million, John is "confident" that for the current year they will show a strong surplus.

John hopes that within two years, the university will be off the "at higher risk" list. "Our staff ratio costs now are down to 53 per cent. We're building our cash up and our loan-to-income ratio is one of the lowest in the sector," he says.

Drop-out rates have improved - they run at 23 per cent - and the latest figures from the ÖйúAƬ Statistics Agency show that 86 per cent of students had secured jobs six months after graduation.

Most dramatically, the university's struggle with recruitment appears over. Once it had a 70 per cent reliance on clearing and just 30 per cent of students were recruited ahead of A-level results day, but today those percentages have reversed. In recent years, the university has seen some of the biggest increases in Universities and Colleges Admissions Service applications in the sector and entry grades have also risen.

Elsewhere, there are plans to invest in a new library and students' union and to open a university technical college in Reading.

To some staff, the old name suggested an "overly ambitious aim to conquer the Thames Valley". Others found it frustrating to have to explain where the university was based. "You no longer have to fear the blank expressions that follow your answer about the university's location," says Daniel Whittal, president of the students' union, who welcomes the change.

But achieving the new title has been a long, drawn-out battle. Brunel University lodged an objection to the plan, arguing that it owned trademarks including "Brunel The University of West London" and that it had long-standing connections with the area. Finally, in August 2010, TVU's application was approved by the Privy Council.

John will not be drawn on this, but says that "the name change represents something quite significant for us. It comes at the back end of change. This is not something that has happened to paper over the cracks. Those in business say that if you are going to change the name of a brand you should do it when you are going upwards.

"Now we are a niche, quality vocational university in West London, committed to personalised education, work-focused learning, high-quality teaching and support services for students and value for money.

"The name represents our history but it is also about what the university represents going forwards. 'West London' represents quality and we are determined that our eight academic schools will reflect that - not in the sense of a research-driven university, but in the quality of what this university does well and does best."

In their 1998 report, QAA auditors remarked that the history of the university had been one of rapid development without any period of stability. There has been no let-up since. Stability is likely to be in short supply post-2012 but, according to John, the university is ready for the challenge.

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There has been "a huge improvement in the fabric of the institution over the past three years in how it looks and feels. We're in such a better position now to face Browne," John says.