[2] On 12 January, Kevin Blackwell and his assistants Sam Ellis and John Carver announced their intention to resign from the club on 9 February.

Blackwell had managed to guide his team to an FA Cup replay against Liverpool at Anfield, which assisted financially, but failed to prevent further sales.

This meant that they were now custodians of the club until the end of the season, and that the Football League would have to negotiate terms to return the Golden Share to Luton Town for the 2008–09 campaign.

[9] Following the player sales in the previous season, Luton manager Mick Harford needed to practically rebuild his squad from scratch.

Luton's form soon slumped – after a draw away at Bradford City and a penalty shootout win over Brentford in the Football League Trophy, they lost two home games in a row.

First Darlington inflicted defeat with a last minute winner in front of the Oak Road, then Luton were beaten 2–1 at home by Accrington Stanley in the first ever meeting between the two clubs.

[13] Meanwhile, manager Mick Harford continued to try to regenerate the squad – Irish winger Garreth O'Connor was drafted in from free agency, as was former Coventry City forward Wayne Andrews.

Craddock earned and scored a penalty after Grimsby had taken an early lead, and then, deep into injury time, crashed the ball into the far corner from long range to secure a vital point for Luton.

[18][19] Three days later, a Tuesday night game against AFC Bournemouth at Kenilworth Road was abandoned after only eight minutes due to bad weather.

[21][22] Ahead of the next game, at home against Dagenham & Redbridge, Luton were boosted by the news that Craddock had extended his loan from Middlesbrough by a month.

[23] However, when Craddock injured his groin only days later, Luton were forced to bring in another striker – former Queens Park Rangers player Kevin Gallen was signed on loan for a month from MK Dons.

[28][29] A 0–0 draw at top-of-the-table Wycombe Wanderers followed a week later, before Luton beat Colchester United in the Football League Trophy to earn a place in the Southern Area Final against Brighton & Hove Albion.

[32] Luton's unbeaten run continued on Boxing Day; Ian Roper's goal six minutes into injury time sealing a point at Chesterfield.

[33] Two days later came a home win against Lincoln City, Roper scoring again after Martin had put Luton 2–0 ahead – the match finished 3–2.

[39] A controversial 3–3 draw with Bradford City saw both teams' managers, Mick Harford and Stuart McCall, and Luton captain Nicholls all set dates for FA hearings following a bizarre refereeing performance from Trevor Kettle.

[40] Craddock signed an £80,000 permanent deal on 27 January, with Drew Talbot leaving for Chesterfield on loan to make room on the wage budget.

[45] 17 February saw Brighton & Hove Albion return for the second leg of the Football League Trophy Southern Area Final.

[48] Newell received an angry reception, which turned to jeers when Hall scored a last minute winner to give Luton the three points.

The match that Tuesday against Rotherham United, Luton's game in hand, could not have been more vital, but the Hatters ended up being defeated 4–2 and suffered a severe blow to their hopes of escaping relegation.

Brian Mawhinney, Chairman of the Football League, was roundly booed by the Luton support before the game, in protest at the huge point deductions imposed at the start of the season.

In the second half, Craddock scored a half-volley from the edge of the box to make it 2–1, but Grant McCann forced extra time with a spectacular strike with only minutes left.

[63] Luton's last home game in the Football League was a 1–1 draw with promotion chasers Rochdale, with Craddock scoring a penalty before Adam Rundle rescued a point for the visitors.

[65] Two days later, long-serving club secretary Cherry Newbury, an employee since 1978, finally left by mutual consent after a period of suspension on full pay starting in January.

Newbury had been secretary since 1994, and was implicated as the employee who drew The Football Association's attention to former directors paying agents through the club's holding company.

[68] The next day saw five players released – Parkin, Dean Morgan, Paul McVeigh, Davis and Brill all left as their contracts had ended.