After a reasonable start to the season, managerSteve Wignall quit in January expressing that he had taken the club as far as he could. Mick Wadsworth was appointed his replacement and duly brought in a number of new players on permanent and loan contracts. Colchester finished the season in 18th position, two points clear of the relegation zone.
The U's were ignominiously dumped out of the FA Cup in the first round by non-League outfit Bedlington Terriers. They also suffered first round exits in the League Cup and Football League Trophy to AFC Bournemouth and Gillingham respectively.
Wignall's side had a reasonable start to the campaign, but were dumped out of the League Cup and Football League Trophy at the first round stages. The U's then faced a trip to non-League side Bedlington Terriers in the FA Cup first round. Bedlington held a 2–0 lead after 23 minutes and eventually held a 4–0 lead after 86 minutes, before Tony Adcock scored a late consolation goal. Following this, Colchester one just one game in their next nine matches.
In January 1999, seven days after handing raw forwardLomana LuaLua his debut, Wignall quit the club, citing that he had taken the team as far as he could and left frustrated at the role agents were playing in deals he had been trying to set up. Assistant manager Steve Whitton stepped up as caretaker manager before Mick Wadsworth was named the new manager of Colchester United. He kept Whitton on as assistant and brought in a number of new players.
The club survived relegation by two points, ending the campaign in 18th place. Crowds had risen to an average of 4,479, but swingeing cuts were made to the playing staff at the end of the season.[5]