One in every 25 mentally ill patients who have been sectioned have "irregularities" in their records which could mean they are being unlawfully detained, the health watchdog said.
Of 4,500 patient records checked by the Care Quality Commission (CQC) between 2011 and 2012, 4% contained mistakes which called the legality of their detention into question.
The number of people detained under the Mental Health Act is on the rise. People with mental disorders can be detained to ensure they get the treatment they need for their own health or safety, or for the protection of other people.
In 2011/12 the number of men and women sectioned in England reached 48,600 - a 5% rise on the previous year.
In its annual Mental Health Act report, the CQC also raised concerns that patients were not informed of their right to see a lawyer. The report says one in five patients were not informed of their right to see an independent mental health advocate.
Officials also said they were worried about cultures where "control and containment are prioritised over the treatment and support of individuals".
The report says: "The human rights of patients are often affected by controlling practices that only seem to serve the hospital's needs. Hospitals have a difficult task in balancing the realities of detention and compulsory treatment with the requirement that they provide services according to a principle of least restriction on patients. But it has proved all too easy for cultures to develop in which blanket rules deny people their basic rights - especially the right to dignity."
Dr Peter Carter, chief executive and general secretary of the Royal College of Nursing, said: "It is extremely worrying that mental health services are coming under increasing pressure with fewer specialists, higher bed occupancy and increased workloads. We want to see well-trained specialist staff supported with continued investment so that the improvements made over the last 10 years do not start to unravel."
Mencap and The Challenging Behaviour Foundation issued a joint statement and said they were deeply concerned that abusive practices, such as over-restraint, seclusion and over-medication, were being allowed to continue.
A Department of Health spokeswoman said: "Improving mental health services is a top priority and this Government has made it clear that we expect the NHS to put the importance of treating mental health problems on a par with physical health. This report confirms what we already knew about institution bias; that is why we support CQC's moves to strengthen regulation and monitoring of mental health services."