Nato is ill-prepared to confront new threats posed by Russia, and members of the western military alliance may not have the collective political will to take concerted action to deter an attack, a cross-party group of MPs warn on Thursday.

Nato's command and control structures, the alliance's ability to predict and give adequate warning of a potential attack and the state of its forces are all seriously deficient, the Commons defence committee says.

The committee's findings come at a time of exceptionally fraught and volatile relations between Russia and the west. Intense gun battles are raging between Ukrainian military forces and pro-Russian rebels around the crash site of Malaysia Airlines MH17 preventing international investigators from approaching the scene.

Sweeping US and EU sanctions on Russia this week are the most severe since the end of the cold war. On Wednesday, G7 leaders said they are prepared to "further intensify the costs" to Russia if it does not change its policy of supporting separatists in the Ukraine.

The MPs' warning has been issued at the same time as another report, by a group of former Russian and European defence and foreign ministers, warning of the increasing likelihood of an unplanned, direct clash between Russian and Nato forces leading to an accidental war, and calling for communication between the two sides to be improved.

"Russian military forces have been stationed near and have exercised close to Ukraine's borders. Nato has announced additional force deployments in eastern Europe," the ministers – including Sir Malcolm Rifkind, the former UK foreign and defence secretary, Des Browne, another former defence secretary, and Igor Ivanov, Russia's former defence minister – write in a report on crisis management in Europe.

"We remain deeply concerned … that the situation on the ground may yet escalate, putting the security of everyone in Ukraine, and Europe, at risk."

In the closest encounter to date, a Russian fighter jet buzzed a US destroyer a dozen times on 14 April in the Black Sea at a height of just 500ft, drawing accusations of recklessness and lack of professionalism from the US navy. Moscow accused the US ship of staying too long in the Black Sea in violation of a 1936 international convention.

"With Ukraine doing better militarily, there is an acute dilemma for [Vladimir] Putin on whether to raise the stakes. It's a dangerous cocktail," said Ian Kearns, director of the European Leadership Network, which published the ministers' report.

"Given this dynamic, it is easy for events to unfold in a way none of the key players intended. It's an illusion we can keep all of this under control indefinitely."

The Commons defence committee said Nato should consider broadening the terms of a key article in its founding treaty triggering collective action in the event of "an armed attack against one or more" of its members.

The MPs argued that given the threat of unconventional "ambiguous warfare", the word "armed" should be removed from the clause, so that Nato could respond effectively to any kind of attack.

"Events in Ukraine demonstrate in particular Russia's ability to effectively paralyse an opponent in the pursuit of its interests with a range of tools including psychological operations, information warfare and intimidation with massing of conventional forces," said the MPs.

"Such operations may be designed to slip below Nato's threshold for reaction. In many circumstances, such operations are also deniable, increasing the difficulties for an adversary in mounting a credible and legitimate response."

The report says Nato must deploy more military equipment to the Baltic states, maintain a "continuous presence" of troops training and exercising in the Baltic, and beef up Nato's rapid reaction force.

Nato must also develop new tactics to respond to the threat of such "ambiguous" attacks from Russia as cyber and information warfare and irregular militia, according to the report.

By contrast, in their joint warning on crisis management, the European and Russian ex-ministers argued for de-escalation and better communication between Nato and Moscow.

"Despite recent phone contact between senior Russian and Nato military officials, there are also currently few, if any, effective exchanges of information on military deployments in the Euro-Atlantic region. EU-Russia crisis management arrangements also do not exist," they said.

To avoid an unplanned clash, the former ministers urged: "Political leaders on all sides should review their military rules of engagement and ensure clear guidance in favour of restraint is passed through the military chain of command."

The report singles out Igor Strelkov as a man whose ambiguous relation to the Russian state was symptomatic of a new asymmetric threat. The former member of the FSB, the Russian security service, whose real name is Igor Girkin, fought in Transnistria, Serbia and Chechnya, and played a role in the annexation of Crimea.

"The uncertainty over his relationship to the downing of the Malaysian airliner on 17 July highlights the unpredictable threats posed by Russia's involvement in asymmetric operations of this kind," the Commons defence committee said.

Radical improvements are needed in Russian expertise within the British government, "allowing for real analysis and assessment of the Russian threat", it added. The Ministry of Defence, as a matter of urgency, must build up "its capacity to understand the nature of the current security threat from Russia and its motivations".

Nato's spokeswoman, Oana Lungescu, said that she had not seen the defence committee report but added: "Nato has already taken measures to reinforce collective defence, especially for our eastern allies, with more planes in the air, more ships at sea, and more exercises on the ground. All 28 allies are contributing, and the United Kingdom is playing an important role in policing Baltic airspace and planned exercises in Poland."

Rory Stewart, Conservative chair of the committee, said: "The risk of attack by Russia on a Nato member state, while still small, is significant … Nato has been too complacent about the threat from Russia, and it is not well-prepared."

He added: "Even worse, the nature of Russian tactics is changing fast – including cyber-attacks, information warfare, and the backing of irregular 'separatist groups', combining armed civilians with Russian special forces operating without insignia. We have already seen how these tactics have been deployed by Russia and its proxies in Ukraine to destabilise a Nato partner state, annex part of its territory, and paralyse its ability to respond."