Halide perovskites excel in the pursuit of highly efficient thin film photovoltaics, with power conversion efficiencies reaching 25.5% in single junction and 29.5% in tandem halide perovskite/silicon solar cell configurations. Operational stability of perovskite solar cells remains a barrier to their commercialisation, yet a fundamental understanding of degradation processes, including the specific sites at which failure mechanisms occur, is lacking. Recently, we reported that performance-limiting deep sub-bandgap states appear in nanoscale clusters at particular grain boundaries in state-of-the-art $Cs_{0.05}FA_{0.78}MA_{0.17}Pb(I_{0.83}Br_{0.17})_{3}$ (MA=methylammonium, FA=formamidinium) perovskite films. Here, we combine multimodal microscopy to show that these very nanoscale defect clusters, which go otherwise undetected with bulk measurements, are sites at which degradation seeds. We use photoemission electron microscopy to visualise trap clusters and observe that these specific sites grow in defect density over time under illumination, leading to local reductions in performance parameters. Scanning electron diffraction measurements reveal concomitant structural changes at phase impurities associated with trap clusters, with rapid conversion to metallic lead through iodine depletion, eventually resulting in pinhole formation. By contrast, illumination in the presence of oxygen reduces defect densities and reverses performance degradation at these local clusters, where phase impurities instead convert to amorphous and electronically benign lead oxide. Our work shows that the trapping of charge carriers at sites associated with phase impurities, itself reducing performance, catalyses redox reactions that compromise device longevity. Importantly, we reveal that both performance losses and intrinsic degradation can be mitigated by eliminating these defective clusters.