Damaged Polystyrene lining paper . Do I need to remove ?

[jacksmum]

We are having a gradual well overdue refurb with me providing ideas & labour & hubby reluctantly coughing up the cashh. Trying to fill cracks etc & paint.
Cleaning my bathroom today & thought " oh my god all the plaster in my my window alcove is damp " Felt soft when I poked it etc. Could I wait till I was getting a few plastering jobs done. Went back with fresh eyes an hour later.
Soft but not damp. Strange !. THen I realised it was lined with polystyrene. This has now got finger indentations all over. What can I do ? Don't want to take it off if I can avoid it . I want to paint, but on a nice smooth surface. Any ideas please.

 

[opps]

Personally I would rip the fire hazzard off but if you must keep it you will need a soft filler such as Red Devil OneTime and then sand it with 180 grit silicone carbide paper, NOT aluminium oxide paper, it is too stiff and will rip the surrounding polystyrene

 

[Bosswhite]

Didnt think Polystyrene lining paper was made anymore due to it being a Fire Hazard along with Polystyrene ceiling tiles.