The school also had a lack of qualified teachers for a number of subjects, according to a report from the the Swedish Schools Inspectorate (Skolinspektionen) which blasted the school on a number of points.
An anonymous report led the inspectorate to come and visit the Digital Room (Digitala rummet), a high school programme targeting school-weary kids, at the Ross Tensta Gymnasium, located north of Stockholm.
There they discovered the students were playing the computer game World of Warcraft for most of the school day, largely unconnected to any school subject.
The students' education was undertaken partly through World of Warcraft, where the teacher and students interacted in part via their online identities, known as avatars, and party via online message service Skype.
"The Schools Inspectorate wishes to emphasise that students' gaming for their own entertainment cannot be part of the education," wrote the inspectorate in their report.
"When you start up a new project, you can't get everything right at once," said Ross Tensta's principal Inger Nyrell to daily newspaper Expressen.
She denied that students have spent half the day playing computer games for fun.
"That isn't our perception."
The programme, which started in September 2010, is designed to attract teens who were tired of school, and spend their days playing computer games at home instead.
The idea being behind the programme was to allow the students to be taught the necessary school subjects via computer games, including World of Warcraft.
"This was a project created to get students who wouldn't have been in school otherwise, to come to school. That's why we got permission to start it," said Nyrell.
However, the inspectorate has taken a closer look at the school's unusual teaching method, and concluded that it fails to provide adequate education through World of Warcraft.
The Digital Room is also lacking qualified maths, media and gym teachers.
Instead, students were equipped with a dance mat connected to an X-Box gaming console, so they could move a bit during gym class. This also proved insufficient to reach course goals, concluded the Schools Inspectorate.
In the wake of the report, Ross Tensta Gymnasium has announced it plans to recruit more qualified teachers for the fall term.
The Swedish Schools Inspectorate are also concerned that none of the students that are at risk of failing have been given an action plan to ensure they can achieve passing marks.
In addition, there appears to be a fair amount of confusion at the school, regarding what sort of high school programme the Digital Room is.
Whilst the school's principle touts it as an individual programme, fashioned for teens who are unable to complete elementary school with the necessary grades, students with whom Schools Inspectorate officials spoke believed they were taking a social science program.
"Our visit showed that it's hard to ensure that this education is good and optimal for the students," wrote the inspectorate.
Inger Nyrell admits there are faults, but states that matters are improving.
"It takes some time to build up a new project," she said.
The Swedish Schools Inspectorate have given the city of Stockholm until October 17 to announce what measures they have taken to improve educational quality.