Scientists are said to fear that a similar effect could be achieved by a hostile power exploding a nuclear weapon in space, producing a massive burst of electromagnetic energy known as a high altitude electromagnetic pulse.
Mr Fox also warned that countries seeking nuclear capabilities could use them in a different way to the traditional 'nuclear strike" method used on Hiroshima and Nagasaki during the Second World War.
Citing North Korea and Iran, Dr Fox said countries seeking nuclear capabilities could use them in a different way to the traditional 'nuclear strike' method used on Hiroshima and Nagasaki during the Second World War.
This could involve a nuclear detonation in the upper atmosphere that would knock out vital electronic systems by producing an electro-magnetic pulse, he said.
He warned that terrorists might also seek to employ similar methods as he urged the public to take greater heed of the threat.
'I think it's a subject that we need to give a good deal more attention to, not least because we are in an era where there are those who seem to believe that we can choose to enter or not enter certain conflicts, and also because we live in a war where proliferation is becoming more not less the case,' the Defence Secretary said.
'And when we are discussing North Korea or Iran, for example, people need to understand there are other risks than just what we would consider the sort of nuclear strike we saw in Nagasaki or Hiroshima.
'The range of risks out there are many-fold and I think we need to make that extremely apparent to the public.'
Dr Fox insisted that the threat of such an attack was 'low', but that the Government was working internationally with telecoms, energy and transport companies to increase resilience.
'With reliance, for instance on technology, comes vulnerability, and vulnerability can invite attack,' he went on.
'Our wider reliance on digital technologies will not have gone unnoticed among those who would mean us harm.
'We will need to ensure that those same technological innovations that provide advantage do not become our Achilles heel.'