The report said the hospital had provided "less than optimal" care
Brain surgery was performed in some cases at Birmingham Children's Hospital without specialist theatre nurses, the health watchdog has revealed.
It led to a surgeon being handed the wrong instrument and the unintentional knocking of his hand, the Healthcare Commission's (HC) report showed.
Incidents like it prompted the HC to be "deeply concerned" about "less than optimal care" at the hospital.
The hospital has "welcomed" the report and taken steps to improve things.
In its investigation, the commission did conclude however, that there was "no evidence of any serious incidents causing harm to patients".
The investigation prompted BCH's chief executive Paul O'Connor to resign on 7 March.
Health secretary Alan Johnson had ordered the inquiry last year because of claims that the specialist children's hospital, of which there are only three others in England, was putting patients' safety at risk.
The Royal College of Nursing (RCN) said it was to be expected because properly trained staff had not been recruited.
"When trust managers don't invest in experienced nurses, patient care suffers and that's what happened at Birmingham Children's Hospital," said Dr Peter Carter, General Secretary of the RCN.
The report said it was "deeply concerning" that "serious concerns" had been raised about clinical care for several months but they were not "properly" or "rapidly" addressed.
These related to:
• A shortage of bed space and lack of access to operating theatres brought about because of a dramatic increase in demand. In the first six months of 2008 BCH treated 2,000 more inpatients and performed 10,000 more outpatient assessments compared with the same period in 2007.
• A lack of interventional radiology for treatment and diagnostic purposes, such as angiograms, which staff said meant some children were being operated on unnecessarily.
• Theatre nurses who had insufficient training to assist in specialist operations.
• An ineffective working partnership between BCH and the University Hospital Birmingham, which helps deliver its services and leaked the original concerns to the press.
I am now reassured that care is safe
Alan Johnson, health secretary
The report said BCH had at times "not responded with sufficient urgency" to the concerns first raised in June 2008, but added "it had now begun to do so."
It made 12 recommendations to help improve the areas of concern, which BCH said it "welcomed".
In the wake of the report published earlier, Mr Johnson said he was now reassured that care was safe.
He said Monitor, which regulates foundation trust hospitals, would assess the situation to ensure the report's recommendations were carried out swiftly.
Sarah-Jane Marsh, BCH interim chief executive said: "Whilst we acknowledge that the issues raised were significant, the clinicians involved at the time managed all situations expertly," she said.
She added the hospital's quality of care was its "top priority" and the commission's report had reinforced its improvement plans.
The hospital's medical director, Dr Charlie Ralston, said many of the problems raised, such as training of nurses, were "definitely history".
"The Healthcare Commission has described very well the situation that existed some eight or nine months ago," he said.
He said the issue of capacity at the hospital was "more complex", but was being looked at in relation to referrals across the West Midlands.
Dr Ralston added it was important to keep the report "in perspective" as the commission had identified problems in only five of the 39 specialities managed by the hospital.
Nigel Edwards, of the NHS Confederation, an independent membership body for NHS organisations, said demand for care at the hospital had increased.
"Birmingham seems to be experiencing what a lot of specialist hospitals are, which is specialist care is often better care so there is a higher demand. But I think people should not be alarmed."