The boy was asked not to wear the five-inch (12.5 cm) kirpan at the Compton School in Barnet after Governors ruled that it was a 'health and safety risk'.
However, Sikhism states that dagger is one among the five 'articles of faith' that must be carried at all times.
The school governors said that they tried to find a compromise asking the boy to wear a two-inch version of the dagger wielded into a sheath.
But the parents rejected the offer saying that the replacement would not be a genuine kirpan.
However, the school said that the boy was welcome to continue at the school.