NHS providers in England recorded a deficit of £2.26 billion in the nine months to the end of December last year - £622 million worse than planned.
Analysis of operational and financial performance shows the sector as a whole made £741 million in efficiency savings between April and December last year.
Providers are under sustained pressure from an increase in demand for care, issues with discharging medically fit patients and high costs.
Many missed several national waiting times standards, with 98,000 people waiting more than four hours in A&E due to poor bed availability elsewhere in their trust.
Overall, the NHS provider sector recorded a deficit of £2.26 billion in the nine months to the end of December 2015.
Jim Mackey, chief executive designate of NHS Improvement, said: "This performance will be very disappointing for providers, and shows the range of difficulties they're facing.
"Despite this, providers are making progress on improving their finances whilst also providing more treatment, to more patients with more complex care needs than ever before.
"However, further improvements will be required by the whole NHS at pace and scale to tackle the current financial and operational challenges it faces."
The report, to a joint meeting of Monitor and the NHS Trust Development Authority (TDA) boards, shows the performance of the NHS provider sector as of December 31 last year.
It found that 179 out of 240 NHS service providers reported a deficit, of whom 131 were acute trusts.
This was due to the ongoing high-use of agency staff, delayed transfers of care and failure to deliver the level of cost improvement schemes planned at the start of the year, the report states.
In total, £2.72 billion was spent on agency and contract staff - £1 billion more than planned.
Providers estimate that delayed transfers of care have cost the sector £104 million so far this year, though other estimates put the true cost at a much higher level.
Savings of £1.94 billion were made by providers, £257 million less than planned.
In January, Monitor and TDA wrote to all providers calling for urgent action to be taken and suggested a range of improvement actions.
A further £452 million of financial improvement opportunities has been identified by providers for the rest of the 2015/16 financial year.
"Taking this improvement into consideration, the sector is currently forecasting a year-end deficit of £2.37bn," the report says.
"We continue to work with providers to deliver a significant improvement targeting a £1.8 billion full year deficit."
John Appleby, Chief Economist at The King's Fund, said there was evidence that "many trusts" would be unable to deliver the savings needed to achieve that figure.
"This has significant implications - any shortfall will come out of next year's budget, eating into the extra funding provided in the Spending Review and leaving even less money for essential changes to services," he said.
"If an end-of-year deficit approaches the worst case scenario laid out in these figures - £2.8 billion - it is hard to see how the Department of Health will avoid overspending its budget for the year, something that has never happened before."
The NHS provider sector as a whole missed the A&E waiting time target of seeing 95% of patients within four hours between October and December.
Only 90.66% of patients were treated or admitted within four hours, a drop of almost 1% on the figure of 91.45% from that quarter last year.
Almost 5.12 million patients attended an A&E department during that time, a rise of nearly 95,000 compared to the same period last year.
Delayed transfers of care meant that more than 98,568 patients had to wait for longer than four hours for a bed - an increase of over 2.1%.
The size of the waiting list for routine operations reached 3.14 million as providers failed the referral to treatment healthcare standard for the first time.
Sally Gainsbury, senior policy analyst for Nuffield Trust, said: "The crucial point to grasp about this deficit is that it has not been caused by a single one-off crisis or event, but by years of hospitals being paid significantly less than their costs.
"Even if hospitals cut their costs by the £5 billion the Government has asked, we estimate it will still take around five years for them to get back into the black.
"In the mean time they will need to be bailed out to the tune of £6 billion. That will have to come from the extra money that was supposed to help GPs and hospitals transform care and introduce new services, particularly for frail elderly people."
Shadow health secretary Heidi Alexander said the figures showed the NHS was now in "financial free-fall".
"The Tories have caused the worst cash crisis in the NHS's history," she said. "Hospitals were already forecasting a £2.2 billion deficit this year.
"However, today's figures show the black hole in the NHS's finances is already larger than that with three months of the financial year still left to go.
"The Government needs to be honest about what this crisis means for patient care. It means cuts to frontline staff, longer waits for treatment and services at risk of closure."
Jane Payling, head of healthcare and integration at the Chartered Institute of Public Finance and Accountancy (CIPFA), said: "This is the worst NHS quarterly performance since 2003.
"Health providers look likely to overspend by £3bn this year and patient care is suffering.
"The NHS needs urgent investment in transformation and prevention - but instead, money is being borrowed to cover day-to-day costs such as salaries. This is not sustainable."