The Mental Health Commission has warned that services could deteriorate unless promised community mental health posts are filled during this year.
The Inspector of Mental Health Services said in a linked report that services are "stagnant" and perhaps slipped backwards in 2012.
In its annual report for 2012, the commission said that while €35m was provided to fill 414 posts to strengthen community mental health services last year.
But it said it is disappointed that less than a third of the posts had been filled by the end of last year.
Commission chairman John Saunders said there was "a real danger that standards of care will fall unless these posts are filled promptly".
The report said that at the end of 2009 there were 1,352 inpatient beds in older, outdated and unsuitable psychiatric hospitals.
It welcomed the fact that the number had fallen to 394 at the start of this year.
But it emphasised that these changes will only benefit patients if community services are developed to replace these inpatient beds.
It also reported a serious deficiency in the provision of recovery-oriented mental health services.
It expressed concern that electroconvulsive therapy continues to be administered in cases where the patient is unwilling or unable to give consent.
It said it awaits the development of mental capacity legislation.
The commission last year used its statutory powers to attach conditions to the registration of nine psychiatric centres.
In six cases, the condition was imposed due to inadequate care planning.
The commission said that mental health services are designed to assist a person's recovery.
It said it does this rather than simply manage their illness and so there is a need for multidisciplinary teams, including psychologists, social workers and occupational therapists.
Last year, there were 2,141 involuntary detentions in psychiatric hospitals and 351 detention orders were revoked before an appeal hearing took place.
Admission orders were revoked in 8% of hearings, which is in line with international norms.
In his linked report, the Inspector of Mental Health Services said overall compliance with regulations, rules and codes of practice last year can only be regarded as "fair", with no significant improvement on previous years.
The inspector expressed "dismay" to discover several examples of inadequate and absent individual care plans.
The inspector was concerned about non-compliance with aspects of the Mental Health Act with respect to involuntary admission and the requirements under law regarding medicating without consent.
He said that the condition of medical records in many approved centres was poor and that improvement in governance and in human rights awareness is not costly.
The inspector also said that most of Ireland's mentally ill receiving treatment "will be offered the more traditional medicalised version" rather than that outlined in the 2006 government policy "A Vision for Change".
The key concepts of the 2006 policy were patient-centred care, multidisciplinary care in the community and less emphasis on inpatient treatment.
Minister for Disability, Equality, Mental Health and Older People Kathleen Lynch said that extra funding of €70m and almost 900 posts have been provided as part of the last two Budgets to strengthen community mental health teams for adults and children.
She also said that a new Director of Mental Health had been appointed by the Health Service Executive.
Minister Lynch expressed disappointment that the pace of change towards a modern, patient-centred, recovery orientated mental health service is slower than what was needed.
Mental Health Commission chairman John Saunders has also warned that services could deteriorate unless promised mental health posts are filled during the year.
Mr Saunders likened Community Mental Health teams to football teams, with half the team missing.
He said: "The Government in 2011 approved the allocation of €35m to be spent in 2012".
However, he said, the HSE was prohibited by its own budgetary constraints from "the commencement of filling those posts until late into last year and while most of those posts are now being filled they're still not completed."
