Video report by ITV News Deputy Political Editor Chris Ship
The UK will "strike back" if it comes under cyber-attack, Chancellor Philip Hammond said as he announced cyber-defence funding will get a boost from a £1.9bn government security strategy.
The package of measures are aimed at protecting the Government, businesses and citizens from online threats including state-sponsored hackers.
Cabinet Office minister Ben Gummer said: "No longer the stuff of spy thrillers and action movies, cyber-attacks are a reality and they are happening now.
"Our adversaries are varied - organised criminal groups, 'hactivists', untrained teenagers and foreign states."
Ministers fear society is increasingly vulnerable to cyber-attack, with the rise in the numbers of devices linked to the internet potentially giving hackers a soft target.
Mr Hammond said that the internet had transformed many everyday aspects of life - but it posed equally large risks.
Indeed, ministers deemed cyber threats to the UK to be as serious as the risk from terrorism in a defence and security review last year.
“There is no doubt in my mind that the precursor to any future state-on-state conflict would be a campaign of escalating cyber-attacks to break down our defence and test our resolve before the first shot is fired," he said.
As a result the government was introducing a range of measures to “block, disrupt and neutralise malicious activity" ranging from major state-directed attacks to individual fraudsters, he said.
The strategy involves significant investment in "taking the fight to those who threaten Britain", officials said, through law enforcement and measures to hit back at cyber-attackers.
Our new strategy, underpinned by £1.9 billion of support over five years and excellent partnerships with industry and academia, will allow us to take even greater steps to defend ourselves in cyber-space and to strike back when we are attacked.
Ministers did not specify which countries posed a cyber threat but the launch of the strategy follows Russia coming under suspicion about involvement in hacks aimed at Hillary Clinton's US presidential campaign and warnings from the head of MI5 about Moscow's actions.
Security expert Gavin Millard said that cyber attacks on citizens were becoming part of everyday life.
He added that while money remains the primary target, if attacks take on a more political purpose then the UK could be adversely affected.
"With boots on the battlefield being replaced by bits and bytes directed at critical infrastructure, shoring up our cyber defences is a prudent move by the UK government", he said.
Mr Millard added: "With ageing critical national infrastructure, investments need to be made to remediate easily exploitable services and reduce the available attack surface an adversary could target".
The Security Service's director general Andrew Parker told the Guardian that Russia "is using its whole range of state organs and powers to push its foreign policy abroad in increasingly aggressive ways - involving propaganda, espionage, subversion and cyber-attacks".
The National Security Strategy, published last year, categorised the threat of cyber attack as a tier one risk - the same as terrorism and global instability.
The Chancellor, who will formally launch the new cyber strategy in a speech in London, will warn how vulnerable society is to online attack thanks to the expanding range of connected devices, the continued use of old IT systems by many organisations in the UK and the ready availability of hacking tools.