I have a fast recovery cylinder. The problem is that the water drops
below the outlet height on the cylinder i think.

You're saying that the water flow ceases entirely?

The way that a gravity fed cylinder works, if the flow rate is too high,
then the hot water will start drawing air through the vent quite quickly.
Perhaps the hot feed on the cold tank isn't near the top? Alternatively, the
system is marginal and the reduced head when the tank is 2/3 full is enough
to reduce the hot water cylinder replenishment enough to draw air.

Does the shower pump run off a flange on the cylinder, or off the top vent?
If the top vent, you should install a flange.

Christian.