The charge ordered La$_{1/3}$Sr$_{2/3}$FeO$_{3-delta}$ (LSFO) in bulk and nanocrystalline forms are investigated using ac and dc magnetization, M{o}ssbauer, and polarised neutron studies. A complex scenario of short range charge and magnetic ordering is realized from the polarised neutron studies in nanocrystalline specimen. This short range ordering does not involve any change in spin state and modification in the charge disproportion between Fe$^{3+}$ and Fe$^{5+}$ compared to bulk counterpart as evident in the M{o}ssbauer results. The refinement of magnetic diffraction peaks provides magnetic moments of Fe$^{3+}$ and Fe$^{5+}$ are about 3.15$mu_B$ and 1.57$mu_B$ for bulk, and 2.7$mu_B$ and 0.53$mu_B$ for nanocrystalline specimen, respectively. The destabilization of charge ordering leads to magnetic phase separation, giving rise to the robust exchange bias (EB) effect. Strikingly, EB field at 5 K attains a value as high as 4.4 kOe for average size $sim$ 70 nm, which is zero for the bulk counterpart. A strong frequency dependence of ac susceptibility reveals cluster-glass like transition around $sim$ 65 K, below which EB appears. Overall results propose that finite size effect directs the complex glassy magnetic behavior driven by unconventional short range charge and magnetic ordering, and magnetic phase separation appears in nanocrystalline LSFO.
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