Utilities, banking and everyday services are at risk from terror groups determined to target the UK, Mr Blunkett has said as he prepares to step down from politics.
Speaking to The Yorkshire Post Mr Blunkett, one of the most senior ministers in the Tony Blair Government, said he wants to continue advising against the growing threat from cyber terrorism when he steps down as an MP at the General Election.
Mr Blunkett’s comments come as the UK remains under a severe terror threat warning, one step away from the highest level. Earlier this year the head of MI5 admitted the security services could not hope to stop every attack, with the so-called lone wolf terrorist difficult if not impossible to predict.
Already several hundred British men and women are thought to have joined IS fighters in Syria and Iraq, with the Government increasingly concerned about the potential radicalisation of those who return.
But across the global financial and security community the threat of an online terror attack continues to trouble emergency planners. In December Allianz, one of Europe’s biggest insurers said it now believed the threat to aviation came as much from terrorist hackers as from bombers and hijackers.
And MI6 spy chief Alex Younger said this week he believes the UK is in “a technology arms race” with “terrorists, malicious actors in cyberspace, and criminals”.
Mr Blunkett, who took over at the Home Office just after the 9/11 attacks on the World Trade centre, said that while the threat of a bomb attack in the UK remained high, there was an even greater risk that is yet was addressed.
Asked if he believed the UK was a safer place now than it was in the months after the New York attacks, Mr Blunkett said: “I think there has been a transformation in terms of the nature of the threat. The physical threat is much less.
“Partly because of the awareness, the steps we took to transfer the investment in the security services from Northern Ireland, which was their centre of gravity for 20 years, to international terrorism.
“But now the threat is cyber. I strongly believe that the attack from cyber, and the dislocation that that could cause to all kinds of essential parts of our well-being, our utilities, our infrastructure, our economy, this is greater than the physical threat, and we really need to take this more seriously in the future.”
The British Government recently announced it would increase funding to counter cyber terrorism by £1.1bn, and spy-base GCHQ is seeking to recruit more online staff, a move Mr Blunkett said he welcomed.
The Sheffield politician was speaking as he looked backed on his 45 years as a councillor and MP in the city, saying that his time in the Home Office from 2001 to 2004 was a challenging but ultimately rewarding period in his high level career.
He said: “The most important part of my job has to have been the Home Office. I was dealing with the aftermath of the World Trade Center attacks, I had only been Home Secretary for three months and was at the very centre of national well-being. It was something you would never want to have to do but you would never duck from doing it if you were in politics.”
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