dont want to leave this but not sure I can help.
You must stay in some form of education or training until your 18th birthday if you were born on or after 1 September 1997. either
full-time education - eg at a school or college
an apprenticeship or traineeship
part-time education or training - as well as being employed, self-employed or volunteering for 20 hours or more a week
The LEA should meet with you if she does want to stay in full time education,now they have upped the age to 18, ask for your local pupil support unit who deal with vulnerable teens and non attendance, as a matter of urgency.. They may be required to provide alternative places to continue or you could even ask them to pay for a private college who will accept her if they cant provide a state alternative ! This very occasionally happens. They might be able to arrange online teaching and home teaching if she doesnt feel ready to go to a new school.
Put the pressure on them to help you and maybe get her to write a letter to about how important education is to her, although she needs more support and help.
I would get letters from camhs/her history ready and fight this decision, even if she doesnt return to this college although ideally if she wanted to return, you could sort part time attendance, and find a college to switch to in September. Although the urgent thing is to decide whats best for your DD.
Colleges do tend to be more flexible. in hours , attendance dropping lessions or A levels etc. Also, you shouldnt have to pay for her tax under 18, and if she stays in further education until 19 as it takes her a bit longer, you will get any benefits for a further year, like working tax credits or child tax credits....
Please fight for her to get the education she wants and deserves. Does she have an ed psych report, getting her extra support in lessons and extra time in exams as she would benefit from this. I wonder that an apprenticeship might be more pressure to deliver unless there is something she would love to do.
Ask camhs to help you get her extra support. Being on medication helps in some ways, but can also affect concentration etc. So sorry its been so hard. The school sound terrible. My DD was a bit younger, but got back into education in a small college, Her attendance was quite low but she did well and is now happily at university. good luck.