Mr. Fallon said Mr. Putin's new aggression could even spark a war with NATO forces. In a blunt message, he said Britain should 'prepare for the worst' as the Russian President flexes his muscles.
He accused Russia of playing a 'provocative and dangerous' game - and warned there was a danger that a Russian military aircraft operating secretly could accidentally crash into an airliner which might not become aware of its presence until it was too late.
A spokesman said: 'Even though direct military confrontation has been avoided so far, the mix of more aggressive Russian posturing and the readiness of Western forces to show resolve increases the risk of unintended escalation and the danger of losing control over events.'
Ministers insist there is 'no military solution' to the Ukraine crisis. But in an interview yesterday, Mr. Fallon suggested this did not necessarily mean war can be avoided.
Asked if a military conflict between Russia and NATO was now a possibility, the Defense Secretary replied: "I don't trust Putin at the moment, and we have to prepare for the worst."
Defense sources insisted last night that Mr. Fallon did not believe a war between Russia and the West was likely. A source said: "He was talking about NATO and the point of the exercises we are doing in eastern Europe, as well as collective self-defense, all acting as a deterrent."