General Sir Richard Shirreff, former Deputy Supreme Allied Commander of Nato, said the UK had “shrunk in to itself” and carries an “increasingly impotent stick”.
He said the country now risked losing its post-Falklands global reputation for military might.
In a new book, he said the risk of conflict between the two sides is at its greatest since the Cold War and predicts they would be pushed over the edge if Russia invaded the Baltic States, who are Nato members.
In the preface, Sir Richard also criticises the demise of Britain’s standing on the world stage and its creeping unwillingness to engage militarily overseas.
He said Britain’s recapture of the Falklands in 1982 had impressed the world, including Russia, but that was now being lost by a government “terrified of being seen to commit”.
“Clearly that stubborn resolve, so respected and admired across the world, had evaporated,” he wrote.
“Britain was now little different from any other semi-pacifist, European social democracy, more interested in protecting welfare and benefits than maintaining adequate defences”.
Sir Richard highlighted comments made by Mr Cameron in 2014 that “Britain should avoid sending armies to fight” and said the impact on allies and potential adversaries was “profound”.
A country famous for once ‘walking softly and carrying a big stick’…now had a leadership that shouted loudly but, thanks to ongoing defence cuts, carried an increasingly tiny and impotent stick.”
In an interview with the Daily Telegraph, he added: “Any talk that Britain is punching above its weight is illusionary.
“We are a G8 country, we have international responsibilities, we are a member of the UN security council and our friends and allies have an expectation that Britain will take a lead and have been disappointed by the extent to which Britain appears to have shrunk in to itself, focused introspectively and in a sense not engaged outside in a way that perhaps we once did.”
Sir Richard’s book “2017: The War with Russia” presents a fictitious scenario but based on fact and his experiences as a senior Nato commander, before he stepped down in 2014.
Sir Richard said: “This tells the story of what might happen in the future and what could so easily happen if the West, the alliance, Nato doesn’t really sit up and take note and understand the very deadly dynamic that is at work, particularly in the Baltic States.
“What we see is a focused spotlight on the Baltics which in a sense has taken over from Berlin and the Cold War. It is absolutely the epicentre of the defence challenge.”
He warned: “I am convinced that Putin wants to see Russia as a great power again.
“I am convinced that he will use every opportunity to achieve that. I am convinced that he sees Nato as an enemy and I am convinced that he could see a scenario and indeed he has war gamed it, he has practised it in which he snatches the Baltic States and then holds Nato to ransom with nuclear weapons and Nato collapses.”
He said Nato needed to “sit up” and take notice and provide a suitable deterrence to Russia.
He said a permanent Nato presence was needed in the Baltics.
In his book, Sir Richard also claims then defence secretary Philip Hammond had wanted “formal action” taken against him when he spoke out about defence cuts in 2014 but nothing could happen because he reported to Nato not to him.
Sir Richard also believes Britain and the EU will be stronger if the former stays part of the union.