Roger Brown's unsuccessful tenure came to and end following a club record 8–0 defeat at Leyton Orient in October. With the club languishing bottom of the entire football league, former RangersmanagerJock Wallace boosted the club and helped them avoid relegation to the Conference, ending the season 22nd of 24 clubs.
Remarkably, Colchester had a successful FA Cup run as they saw off Fulham, Swansea City and Shrewsbury Town on their way to a fourth round tie with Sheffield United, who knocked out the U's following a Layer Road replay. They again reached the area quarter-final of the Associate Members' Cup where they were defeated by Hereford United, and a 5–0 thrashing at Northampton Town spelt an early exit from the League Cup.
Just weeks after signing for the club for £35,000, Paul McGee was sold to Wimbledon for a club record fee of £150,000, representing a huge profit in a short period of time.
Incoming as Brown's replacement was former Rangers manager Jock Wallace, with EnglandWorld Cup winner Alan Ball his assistant. The impact of Wallace's appointment was instantaneous, with crowds rising over 3,500 the town became gripped by his passion and desire to avoid relegation to the Conference.
On 29 April, the U's travelled to their closest rivals Darlington, a game which Colchester won 2–1 thanks to a Robert Scott goal. The win lifted Colchester off the bottom of the league table for the first time since Brown's departure, and two successive home wins against Halifax Town and Exeter City confirmed Colchester's Fourth Division status for another year.
Meanwhile, in the League Cup, Colchester suffered an early exit following a 0–0 draw at home to Northampton Town and then a 5–0 hammering at the County Ground in the return leg. In the Associate Members' Cup, Colchester won their two group stage games against Lincoln City and Southend United, before regaining some pride by beating Leyton Orient at Layer Road to progress to the area quarter-final. They were then beaten 1–0 by visitors Hereford United.[5]