Storm damage once again struck Layer Road with the roof being blown off. A shortage of steel meant that re-construction was still not complete as the 1949-50 season kicked off . Manager Jimmy Allen strengthened his defence with the signings of Reg Stewart and Bill Layton and, by Christmas 1949, United had lost just three of their 28 games played, one of which was in the FA Cup at Wealdstone. The game was one of the first FA Cup ties to be televised but this time it was United on the receiving end of a shock.
The U's led the table all season until a disastrous, fixture-congested April when they were held to home draws by Torquay Reserves and Gravesend & Northfleet and suffered 5-0 and 6-1 defeats at main rivals Merthyr Tydfil and Gillingham in the space of three days. In between those two defeats, they also recovered some pride with a 3-0 first leg Southern League Cup Final lead over Bath City. Completing their fourth match in five days leg weary United allowed Bath back into the game and a last minute goal from the visitors took the game into extra-time at 4-1 in Bath's favour. Vic Keeble and Dennis Hillman scored in the extra 30 minutes and Colchester won the trophy for the second time.
With Gillingham having defeated Merthyr in midweek all United had to do in their last fixture was to win at Barry Town to secure the title. Try as they might The U's could not break down the Welshmen's defence. The game ended 0-0 and Merthyr took the title on goal average with the 5-0 hammering over Easter helping to swing the title to Wales. All the more galling as Vic Keeble had netted 45 times, a seasonal club record that still stands, with Bob Curry adding 24 and Fred Cutting 22. Fellow forward Arthur Turner had been out for almost the entire season with a cartilage injury.
June 3, 1950 was then another red-letter day in United's history. Only Everton and West Brom opposed the expansion of the Third Division's North and South preferring another regional League. Of the applicants to join the southern section Gillingham polled 44 votes, Colchester 28, Worcester 11, Chelmsford 8, Peterborough 5 and Yeovil and Merthyr just one each. Colchester United had been elected to The Football League with an enviable Supporters Club membership of over 16,000 and an average gate of 8,500.