The maternity services at the Jessop Wing at Sheffield Teaching Hospital have been downgraded from "outstanding" to "inadequate".
The Care Quality Commission found that "urgent action" was needed after it was found they did not provide "the standard of care women should be able to expect".
An unannounced inspection by the CQC in March was prompted following concerns over the quality of services being given to mothers and babies.
The service was also rated inadequate for being safe and well-led, according to the regulator.
Findings from the inspection included a lack of effective systems to ensure staff had the skills, competence, knowledge and experience to safely care for women and their babies.
Sarah Dronsfield, CQC's head of hospital inspection, said: "When we visited maternity services in the Jessop Wing at Sheffield Teaching Hospitals NHS Foundation Trust, inspectors found a service that was not providing the standard of care women should be able to expect.
"Our findings were such that the ratings for maternity services across the trust have moved from outstanding to inadequate."
Ms Dronsfield added that some areas of good practice had been found, such as staff wellbeing, equality and diversity, and that an action plan had been provided.
Following the CQC's decision, Sheffield Teaching Hospitals' chief executive and chief nurse assured women coming to the Jessop Wing that they will continue to receive safe, good care.
Kirsten Major, chief executive of the trust, said: "Our maternity teams work incredibly hard every day to ensure their care is always the number one priority.
"Whilst we are exceptionally disappointed with the findings of the CQC report, we welcome the external scrutiny and have wasted no time in responding to the actions which have been identified as necessary.
"Many of the actions have been completed in the three months since the inspection took place."