Colchester finished sixth in the league table come the end of the season, but were nine points distant of promoted Port Vale in fourth place. The U's were knocked out of the FA Cup by non-League opposition in Wycombe Wanderers in the first round, and exited the League Cup in the first round to Millwall. Despite a win against Southend United in the Associate Members' Cup, Colchester were defeated by Northampton Town who progressed from the group stages to the knockout phase of the competition.
Following regulation changes in the wake of the Heysel Stadium disaster and the Bradford City stadium fire, Layer Road was facing £500,000 of safety improvements to bring the ground up to standards. With the club ailing financially, sections of the ground were closed, reducing capacity to 4,900.
In October, the club were top of the table, but after suffering six successive league defeats, four without scoring, the club slid down the table and crashed out of the FA Cup to non-LeagueWycombe Wanderers. They had already made an early exit to Millwall in the League Cup and would soon follow suit in the Associate Members' Cup.
Lea struggled to find a strike partner for Tony Adcock following a car crash that ended Keith Bowen's playing career. The side were otherwise free scoring, and despite a good record, Lea was sacked three weeks ahead of the end of the campaign and replaced by Reserve team coach Mike Walker. Walker, initially in a caretaker capacity, took the U's on an unbeaten run for their final eight games of the season, winning five. This left the club in sixth position in the table, nine points shy of promotion.