The care watchdog highlighted how a lack of staff has created an unsafe environment for carers and patients alike, with staff being attacked on acute wards and patients being admitted when it was not safe to do so.
Karen Bennett-Wilson, CQC’s head of hospital inspection, said: 'We did find areas of concern which led to a drop in the overall rating of the trust.
'In particular, we were concerned that the trust did not have enough staff to meet people’s needs in four of the six services we visited, and this was leading to low morale in some areas.
'Some staff said that they felt pressurised to admit patients onto wards when it was unsafe to do so, and we were told the number of injuries to staff and patients during incidents of aggression on the acute wards and PICU was increasing.
'However, the trust had plans in place to recruit more staff and understood that this needed to be a priority. We have told the trust that it must now make a number of additional improvements and we will return to check that these have been made and fully embedded.'
The downgraded rating comes in the wake of the Pascoe Report, sparked by the death of five patients between 2011 and 2015.
Following Nigel Pascoe QC's report, Southern Health has implemented an action plan to better handle complaints and staff concerns - although bereaved families say this won't be enough to prevent further deaths.
CQC inspectors also noted that new leadership in the trust was 'stable and capable' and that changes are already being made.
It was also found that staff were 'proud to work for the trust' with a positive and supportive culture.
Ron Shields, chief executive of Southern Health NHS Trust, said: ‘Our staff have been phenomenal over the last two years, doing everything possible to maintain services in extraordinary circumstances and we are pleased that this has been recognised by the CQC. During this time, staff resources have been incredibly stretched in some areas and this has been reflected in the CQC’s findings.
‘Whilst we are disappointed by the change in overall rating, we are encouraged that the CQC praised our staff and our culture of care, heard positive feedback from patients, and found strong, supportive leadership actively tackling the challenges.
‘We are responding to the staffing pressures highlighted by the CQC and are focused on supporting the health and wellbeing of our people.’