The school's board chairman Eddie Lei Kwok-kit said the monthly rent went up from HK$200,000 to HK$350,000 in 2011. He said school administrators had decided not to renew the lease, which expires on August 31, as consultants had told them the rent would probably be raised to more than HK$400,000 this time.

"If we renew the lease, we'll have to raise tuition fees," Lei said. "But 70 per cent of our pupils are from an ethnic-minority background and many parents can't afford higher tuition fees."

Fees at the direct subsidy school range from HK$8,000 to HK$13,500 per year.

Lei said the government had given St Margaret's use for five years of a vacant campus in Sha Tin after a school closed. But it came on condition that it must stop enrolling new pupils.

That means St Margaret's may too have to close if it fails to secure a permanent campus before its 400 pupils from Form One to Form Five graduate, Lei said.

Parents were urging the Education Bureau to find the school a permanent location so that it could continue enrolling pupils, he said.

"St Margaret's plays a very important role in helping ethnic-minority pupils integrate," said Paul Stables, chairman of the school's parent-teacher association. "We have a vibrant multicultural education. This is something worth fighting for."

Lei said the government had refused to promise the school a permanent campus, insisting instead that it wait and apply for the next batch of available sites.

"The Education Bureau is completely irresponsible," said parent Charles Yeung Chun-kit, whose daughter will start Form Five in September. "Parents are all very offended … They're living off taxpayers' money and this is how they treat us."

Yeung said the school did not spoon-feed pupils but engaged them in group discussions, cultural interactions and creative activities. "It's like a low-cost international school. It will be a loss to Hong Kong if it closes down," he said.

Civic Party lawmaker Kenneth Chan Ka-lok said the officials' response to the school's plight reflected their "bureaucratic thinking". He said it was unreasonable for the government to save a school that was facing closure because it lacked pupils, yet leave a popular school such as St Margaret's in the lurch.

In a written reply to the Legislative Council last month, Education Undersecretary Kevin Yeung Yun-hung said St Margaret's could apply for a new home via the school allocation exercise. "Land is a valuable resource. School premises have all along been allocated in an open, objective manner," Yeung said.

But when the Canadian Overseas International School closed in 2001 due to financial difficulties, the government set up a temporary home for its pupils and promised it a permanent campus. The school is now the private Renaissance College.