Mike Walker was appointed as permanent manager after finishing the previous campaign in a caretaker capacity.

Early in the season, Perry Groves was sold to Arsenal for £50,000, but despite this Colchester were bookmakers favourites heading into the new term.

Seven successive away defeats from December denied the U's this opportunity as they came home in fifth position, ten points shy of promoted Essex rivals Southend United.

They faced fourth-placed Wolverhampton Wanderers at a rain-soaked Layer Road in their semi-final first leg tie in front of a near-capacity 4,829.

The visitors came away with a 2–0 victory, and a 0–0 draw at Molineux Stadium in the second leg meant Colchester would remain in the Fourth Division for at least another year.