Following a club record 8–0 defeat at
Leyton Orient on 15 October,
Roger Brown was dismissed from his position as
manager. With the club bottom of the entire
Football League for the first time since 1972,
Steve Foley once again stepped up as
caretaker manager. Under Foley's stewardship, the U's embarked on a successful
FA Cup run, where they defeated
Third Division Fulham and
Second Division Swansea City and
Shrewsbury Town. However, Third Division
Sheffield United won 2–0 in a replay at
Layer Road to progress to the fifth round. 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
England World 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. ==Players==