"This is now impacting on patient care and health and safety for staff as patient irritation and frustration regarding meals grows.
"Many [mental health] patients are in hospital for long periods of time, sometimes years, many are subject to legislation and are unable to go out to get any food other than what is provided for them by the food service," the memo says.
The memo was sent from the leadership team, including medical director Dr Brad Strong, to the women's, children's and public health directorate, which has oversight of the food service.
Dunedin South MP Clare Curran said it showed the board had a "serious problem on its hands".
"This is not about meals looking pretty on a plate. This is a health issue, and a mental health issue," Ms Curran said.
Chief executive Carole Heatly said Compass had started having regular meetings with the mental health team, and the feedback from patients was taken seriously.
"Following these meetings, ... changes have been implemented and there has been an improvement in the food.
"We are talking to the patients on the unit to find out exactly what the reasons are for the dissatisfaction about the food so we can address this with Compass to put this right for our patients."
The mental health wards in Dunedin are in Wakari Hospital. Compass has also been under fire over the quality of meals being served in general wards. Last week, it announced the introduction of two "patient experience co-ordinators" to monitor feedback.
Under a controversial 15-year outsourcing deal approved last year, Compass is providing patient meals, staff meals, and meals on wheels.
