The kingdom is failing to make progress in key areas such as worker and fire safety and the use of child labour, the ILO said in a report.
"Our data shows that following steady improvement in working conditions from 2005 to 2011, conditions are now declining," said Jill Tucker, chief technical adviser to the ILO's Better Factories Cambodia programme.
Action is needed to reverse the deterioration, or "Cambodia runs the risk of forfeiting the advantages that accrue to a reputation for decent working conditions", Tucker said.
It also identified worsening heat and sanitary conditions, as well as suspected use of child labourers, in more than a dozen factories covered by its report.
Concerns over worker safety in Cambodia intensified in May after a ceiling collapse killed two workers at a Taiwanese-owned factory producing shoes for Japanese sports brand Asics.
Workers have staged a series of protests at low wages and tough conditions in the multibillion-dollar industry, which employs about 6,50,000 people and is a key source of foreign income for the impoverished country.
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