Alder Hey Children's Hospital has been deemed to "require improvement" by inspectors.
The Care Quality Commission (CQC) said that Alder Hey, which is one of Europe's busiest hospitals for youngsters, was falling down in its care for critically ill youngsters and its outpatient services.
The Liverpool-based hospital, which cares for more than 270,000 children from across the north west, north Wales and the Isle of Man every year, was also told to improve its safety and responsiveness.
Inspectors found that the wards were not always staffed properly and there were long waiting times for outpatients.
In the high dependency unit there were not enough senior doctors to ensure that all risks were always safely managed, they said.
But the trust responsible for the hospital, Alder Hey Children's NHS Foundation Trust, was rated as "outstanding" and "good" in other key areas including end-of-life care and surgery.
Alder Hey is one of four dedicated children's hospital trusts in the UK. As well as caring for youngsters in the north west it also offers specialist care to children from across the country.
Inspectors visited the trust in May and gave each of its core services Ofsted style ratings.
Critical care, transitional services and outpatient care were deemed to require improvements.
CQC also said that overall the safety, responsiveness and leadership at the trust needed to improve.
But overall the inspectors found that the services were effective and caring.
However, they have ordered the organisation to make a number of improvements including to address staffing shortfalls, ensuring children in the high dependency unit receive one-to-one care when required, improve access to record in the outpatients department and ensure safe medicine administration procedures are adhered to.
"We came across numerous examples of staff going the extra mile to care for and treat children and young people in a highly personalised and sensitive way. Patients and relatives praised the staff for the commitment they showed to their work," said CQC's chief inspector of hospitals Professor Sir Mike Richards.
"However, I am concerned that shortages of nurses in some departments may affect patient care. While there have been moves to improve the recruitment process, the trust must continue to make this a priority.
"Our judgement is that this is a good hospital in many ways - but the issues which we have identified are preventing it from achieving excellence.
"The trust has told us it is taking action - I hope and expect to return in due course to find that the problems have been addressed."
Louise Shepherd, chief executive of Alder Hey Children's Hospital, said: "We are reassured that the CQC did not highlight any issues that we weren't already aware of and aiming to improve upon, some of which have now been resolved.
"In the last year we have invested over £1m in additional nursing staff and 37 new nurses have been appointed just this month. We have also worked hard to improve communication and engagement with staff, the availability of clinical records, administration of medicines, incident management and medical leadership.
"Alder Hey has been delivering pioneering healthcare and treatment for the last 100 years and our new hospital, which opens next year, will provide an exciting opportunity to enhance our role as a leader in children's healthcare.
"Our priority now is to deliver our comprehensive action plan which will allow us to make further improvements that will demonstrate excellence in everything we do."