There are not enough servicemen and women to meet the demands placed on the UK armed forces by the situations in Afghanistan and Iraq, MPs have said.
The overall shortfall stood at 5,850 in April - up from 5,170 in 2006
The Commons public accounts committee said the overall shortfall in personnel stood at 5,850, or 3.2%, of full strength in April.
Numbers leaving early reached a 10-year peak in some areas, the report said.
The Ministry of Defence said there were shortages, but that "some of the pressure should soon start to ease".
Defence Minister Derek Twigg said the current "high tempo of operations" was stretching the armed forces, but insisted that recent reductions in the numbers serving in Northern Ireland, Bosnia and Iraq would help.
"I accept that there are manning challenges and shortages in some specific areas, but we are taking action," Mr Twigg said.
The committee called on the MoD to develop a long-term strategy to deal with the problem.
The report concluded that shortages were particularly severe in specialist areas, including vehicle mechanics and nurses.
Chairman Edward Leigh said downsizing and overstretching were affecting the ability of the MoD to "retain and provide a satisfactory life for armed forces personnel".
"The MoD has been relying for too long on the goodwill and courageous spirit of our servicemen and women to compensate for the increasing shortages of personnel in all three services," he said.
"The staffing situation has reached the point where there are simply not enough service people to meet levels of military activity planned some years ago - let alone the heightened demands now being placed on them by commitments such as the Iraq and Afghanistan operations."
For the past two years, the numbers leaving early had risen, the report said.
Heavy workloads, frequent overseas deployments and impact on family life were key reasons for this.
These figures had reached a 10-year peak for members of the RAF of all ranks and army officers, it said.
The MPs said cuts in recruitment in the 1990s had also had an impact on current staffing levels.
"The MoD must think hard when it makes cuts in recruitment about the consequences for manning levels some years along the line," Mr Leigh said.
"The consequences to manning levels are almost impossible to rectify speedily and any measures taken seem to cost more than was saved by the original cuts."
The MoD denied that there were increasing shortages of personnel.
"The number of people leaving has remained broadly stable and compares favourably with the retention rates in the public and private sector," Mr Twigg said.
The committee welcomed last year's tax-free allowance of £2,240 for those serving in Iraq, Afghanistan and Bosnia.
It also backed the offer of pay rises to encourage the retention of specialist staff, but said further measures - including longer notice of deployments - were needed.