The scale and speed of cuts in non-news output will see the channel's Welsh programming shrink from the current four hours a week, to just an hour-and-a-half after January.
It is thought this could lead to compulsory redundancies.
This is despite an emphasis in the Ofcom report on the importance of news in the devolved nations and English regions - although it warns this is likely to require new and extra funding.
Ofcom's Wales director Rhodri Williams said the proposals provided a "sustainable settlement" despite "the extensive economic pressures faced by ITV".
He said: "It is strongly in the interest of viewers in Wales to retain public service programming from ITV at a realistic level rather than risk losing such delivery altogether."
Wales' heritage minister has said he plans to seek an urgent meeting with UK government ministers at Westminster to discuss the assembly government's concerns.
He said the proposal to cut the hours of public service broadcasting on ITV Wales was a dramatic loss and a blow for Welsh audiences.
Mr Jones said: "It is a matter of huge concern to me that cutting the services offered by ITV Wales will deprive Welsh citizens from receiving a diverse range of programmes which reflect their everyday lives.
"Welsh audiences, loyal to ITV Wales, could also be deprived from gaining access to information about the democratic institutions which serve them - this, in turn, could affect their level of participation in those political processes."
In the long term, Ofcom said it saw a key role for S4C as a provider of Welsh Language programmes.
It said the "evolution" of public service broadcasting could also include a Wales-only Channel 3 licence, instead of Wales and west of England as currently, although this would need a public subsidy.
In a statement, ITV plc said: "We have consistently argued that the regulatory costs and commercial benefits of holding the ITV plc licences need to be re-balanced between now and analogue switch off in 2012.
"We welcome Ofcom's acknowledgement of the need to strike the right balance between these costs and benefits, which is reflected in its proposals for ITV plc's regional news services, regional non-news programmes and the Out of London quota."
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