Alder Hey Children's Hospital failed to meet four out of five safety standards in an inspection by a health watchdog.
The Care Quality Commission (CQC) inspected the hospital in December after being approached by staff.
The hospital failed to meet standards of care and welfare, staffing, supporting workers and assessing and monitoring the quality of service.
The commission said it was "very worrying" and it was monitoring the trust closely.
At the time of the inspection, the theatre department had high level of staff sickness which led, on occasion, to operations being cancelled.
The ratio of staff in theatre recovery was "potentially unsafe and meant that patient welfare and safety was at increased risk although corporate quality assurance systems were in place".
Staff shortages on some wards "meant that nursing staff were rushed to meet the needs of patients", the inspectors found.
Theatre staff "had not always followed published national guidance on the availability of equipment" and maintenance checks on some equipment was "not taking place routinely".
They felt "unsupported" in a reorganisation of the theatre and felt "the management team had not listened to them".
The CQC informed NHS England and Monitor of its findings.
Malcolm Bower-Brown, the commission's regional director for the north, said: "The problems we identified at the Alder Hey Hospital are very worrying. We have told the trust where further action must be taken to ensure national standards are met and that patients receive the quality of care they are entitled to expect."
"Undertaking announced inspections in response to information of concern is a vital part of CQC's role and we encourage anyone with concerns about any registered service to contact us immediately," he said.
He said inspectors would return to the trust to ensure necessary improvements had been made. "In the meantime, we continue to monitor the trust carefully, working closely with NHS England, Monitor and others."
In January, a leaked report uncovered "safety shortcuts" in operating theatres at the hospital.
The internal review, passed to Channel 4 News, found "pressurised staff" with a "mistrust of management" feeling they worked in a "hostile environment." Theatre scrubs suits were "shabby and mismatched".
Louise Shepherd, chief executive of Alder Hey Children's NHS Trust, said many of the concerns echoed those raised by their director of nursing at a board meeting in December "after she had already begun working closely with theatre staff to make improvements".
She said a steering group led by trust chairman Sir David Henshaw was set up and an action plan developed. She said: "Many of these actions have already been implemented. Actions have already been taken to improve training, staffing allocation and quality processes in theatre."
Ms Shepherd said "there is no evidence that patients have been harmed as a result of these concerns and we remain confident that we are providing a safe service".
She said changes to the culture of the theatre department "will take time" and they had made "a long-term commitment to supporting this team".