A former head of MI6 has told Sky News the Navy may be forced to "fire a warning shot" or "cut off" a Russian spy ship loitering off northern Scotland.

Defence Secretary John Healey has said Britain has "military options ready" after the Yantar shone lasers at RAF pilots tracking it.

He called the incident "deeply dangerous" and said the ship was "designed for gathering intelligence and mapping our undersea cables".

It's being monitored by Royal Navy frigate HMS Somerset and is understood to be on the edge of UK waters.

"We see you, we know what you're doing, and if the Yantar travels south this week, we are ready," Mr Healey warned Moscow.

He said the ship had "entered the UK's wider waters over the last few weeks" - for the second time this year.

Russia's UK embassy dismissed the accusations - which it said "raised a smile" - and insisted the Yantar is a research ship in international waters.

It said it had no interest in UK undersea cables and warned the government to "refrain from destructive steps".

However, Sir Richard Dearlove - who led MI6 from 1999 to 2004 - told Sky News' Politics Hub the ship was clearly "part of Russia's underwater warfare capability".

"I think it can launch submersibles from under its keel. And they're probably recceing undersea connections into the UK," he said.

"We have a lot of strategic links; whether that's data links, electricity cables, gas links.

"There's a real vulnerability there. It's quite normal in a heightened tension for the Russians to be scouting this stuff out."

Sir Richard said he believed the Navy frigate "would be very aggressive" if the Yantar "came in too close".

"Maybe they would fire a warning shot, or maybe cut it off in such a way as to get it to change course," he told Sky's Matt Barbet.

However, he said defence chiefs would be mindful of avoiding an "unnecessary confrontation".

"It's much better to sort of broadcast a warning; and I think it's quite clever to John Healey to stand up in there and make a public display of our knowledge," he said.

The Yantar has been within the UK's exclusive economic zone, which extends about 200 nautical miles offshore, but has also been on the edge of Britain's territorial waters - within 12 nautical miles of the coast.

The laser incident is believed to have happened in the last fortnight - and Mr Healey said it was the first time the ship had tried to dazzle RAF planes.

However, it's believed lasers have previously been used by Russian ships against other vessels.

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The defence secretary told reporters the Yantar was intended for surveillance ops in peacetime and sabotage in wartime, and that the UK was in a "new era of threat".

'Grey warfare'

Russia has long been suspected of sabotaging undersea cables elsewhere, such as in the Baltic last year, and its vessels are often shadowed as they pass near the UK.

Sir Richard said Russia's campaign of "grey warfare" meant it was prepared to "do things which are quite hostile, quite provocative" - and that Britain's strong support for Ukraine made it a target.

"I think in the current circumstances, the Russians will do almost anything short of open conflict," said the ex-MI6 boss.

"They just tried to blow up the main railway line in Poland that runs into Ukraine and carries military supplies."

The defence secretary's warning came after a report from MPs warned the UK lacks a plan to defend itself from attack, despite the government promising to boost readiness with new arms factories.

At least 13 sites across the UK have so far been identified to make munitions and explosives, with the first plant expected to break ground next year.