Bishop's Castle Community Hospital will cease all admissions from the end of the week.
Patients currently at the 16-bed hospital will be assessed and discharged to "the appropriate place of care" by Sunday, October 31, according to officials.
In a statement Shropshire Community Health Trust, which manages the hospital, said that staffing issues over the last six months had left it "extremely difficult" to run the hospital.
A spokesman said: "Shropshire Community Health Trust (SCHT) can today confirm that Bishop’s Castle Community Hospital is set to be temporarily closed on safety grounds.
“SCHT is committed to providing high quality care, and this has proved to be extremely challenging at Bishop’s Castle due to long-standing staffing issues.
“Recruitment has been a problem for several years.
"For the last six months it has become extremely difficult to maintain the qualified staffing levels required to run the hospital.
"This has been exacerbated by the coronavirus pandemic, which has and continues to impact us severely.
“We have been actively managing the issues with our fantastic staff, but despite their best endeavours we have been unable to secure the right level of substantive staff to deliver optimum care to patients.
“We have therefore taken the difficult decision as a trust to temporarily close the hospital.
"New admissions will cease from the end of the week. All current inpatients will be assessed and discharged to the appropriate place of care by Sunday, October 31.
“As part of our system Local Care Transformation Programme, we will continue with our plans that aim to engage, involve and co-design new models of care with residents and communities, with a focus on prevention and promoting good health and wellbeing.
"The first phase of our engagement will commence during the winter months.”
The move has been criticised by health campaigners.
Chair of Shropshire, Telford and Wrekin Defend our NHS, Gill George said: "What they are showing yet again is contempt for rural communities. This is a completely absurd time to be taking capacity away from hospitals. Ambulances are already stacked up outside hospitals waiting to hand patients over.
"The system is already stretched to the limit. There aren't enough host beds now, and this is the worse possible time to be reducing the number of beds even further and this is what this decision means in practice.
"What lies ahead if they continue with this is a winter of crisis and people dying, avoidably, in Shropshire."
South Shropshire MP Philip Dunne has called for the safe resumption of services as soon as possible.
Mr Dunne said: “I have discussed this planned closure to new admissions with Shropcom’s new chief executive, who has assured me this is a temporary measure, pending recruitment of new qualified nursing staff.
"While it is not clear how long this will take, I have been assured that the decision has been taken on patient safety grounds, and once sufficient staff have been recruited, the hospital will resume normal service.
"The hospital at Bishop’s Castle has been dependent on qualified agency nursing staff, in recent weeks, which is not sustainable.
"While new staff are being recruited, I am concerned to ensure that existing staff are deployed in the local community or at Ludlow Community Hospital, to give them the stability they need during the interim period. I know the excellent GP medical practice in Bishop’s Castle is working closely with the community trust and hospital staff to provide advice and support to local patients.”
Dr Adrian Penney, of Bishops Castle Medical Practice, added: “The practice has and will continue to support the hospital, and recognises the loyalty and commitment of all the staff and is determined to retain them to work locally in the community they know. The practice would like this to be an opportunity to develop the provision of other medical services locally in the community.”
The hospital provides care for patients who do not need to be admitted to an acute hospital, or have been transferred from an acute hospital for rehabilitation or recovery following an operation, or who need palliative care.