The Government inspection service, Ofsted, which has made repeated visits to the home over the past few months, has issued it with a Notice of Decision to cancel its registration.
The private residential home for young people on the autistic spectrum is run by ROC Northwest and the company is considering its right to appeal.
Meanwhile five children remain at the home, where there have been repeated failures to safeguard residents.
A ROC Norhwest spokesperson said there had been recent improvements at the home, which had been acknowledged by Ofsted. The company issued a statement saying : “We remain fully committed to the Mountwood children’s service. We are working closely with Ofsted and other stakeholders and there is acknowledgment of the progress that has recently been made and which has been confirmed by Ofsted in monitoring visits.
"Based on this progress, Ofsted has recently issued a notice of its intention to continue to vary our registration to remain at 10 young people.We will strive to deliver the highest standards of care for the five children currently at the service whilst we continue to work with Ofsted on the future of the service."
Following earlier visits this year Ofsted had insisted numbers be reduced at the home and youngsters had to be moved, including two placed at Mountwood Academy by Lancashire County Council.
Inspectors have outlined numerous concerns and said children had been harmed both physically and emotionally .After a full Ofsted inspection in April the home was judged as "requires improvement to be good."
A spokesperson from Lancashire County Council said: "The two young people in the county council's care were moved out of Mountwood and we are currently in the position where we will not place any more young people at this home. We work closely with Ofsted within our safeguarding role and support them in their work to ensure facilities offer a safe environment for young people."
The council added that where other local authorities have placed children at Mountwood those councils have the responsibility of being "corporate parents".
Ofsted said its “primary concern is to ensure children are safely and appropriately cared for and accommodated in accordance with the relevant regulations. Where this is not the case, we will take appropriate enforcement action."
A statement has been issued to staff by ROC Northwest which acknowledges the home's registration will be cancelled on December 16 if the company does not appeal.