Liam Fox has warned that the current standoff with Iran is "potentially very serious", but believes it's unlikely that Israel will launch an attack on the country.

In his second broadcast interview since losing his job as defence secretary last October in the Adam Werritty lobbying row, Dr Fox warned that Iran has the potential to "trigger a nuclear arms race" in the Middle East if it is allowed to develop a nuclear weapon.

Speaking to the Today programme on BBC Radio 4 he talked of Iran's "long-standing desire to have regional hegemony" in the Middle East, adding that Syria was "very much" a client state of the Tehran government.

Urging the West to stand firm against Iran, and calling upon China and Russia to back attempts to curb any nuclear proliferation in the Middle East, Fox downplayed concerns that Israel could launch an attack on Iran. "I dont think the Israelis believe they would be able to inflict the necessary damage on Iran to stop the nuclear programme," he said.

Fox was echoing comments in the Commons on Tuesday by foreign secretary William Hague, who warned that any attempt by Iran to block the key oil trade route in the Strait of Hormuz would be illegal.

Western powers are attempting to shore up oil supplies ahead of a possible ratcheting up of sanctions against Iran, which is likely to include an embargo on Iranian oil exports. Iran has responded by threatening to close the Strait, which are technically Iranian waters but which have international rights of passage under UN laws.

On Tuesday a flotilla of western ships passed through the strait, in an attempted display of force. The UK government has signalled it would be prepared to send further military forces to the region to keep the supply route open

"The regime in Tehran has a mindset that's very difficult for Western governments to get their heads around," said Fox, who believes that Iran is trying to manipulate the tensions among Sunni and Shia Muslims in the region to further its own agenda, warning that if Tehran managed to produce a nuclear weapon, countries like Saudi Arabia and Turkey would quickly follow suit.

Liam Fox also discussed his ejection from the Cabinet in the wake of the Adam Werritty scandal, saying no longer being a secretary of state had its advantages.

"I've rediscovered the benefits of sleep and lunch, which are enormously helpful," he said, adding: "I've also realised how incredibly pigeonholed you can become in departmental politics."

"I think it's very easy when you're in the MoD trying to deal with an inherited massive overspend to get your head around the wider picture is quite fascinating.

"To be able to see things in their wider perspective is an instructive lesson to those of us who have been in those big cabinet jobs, that perhaps we needed to spend more time thinking about what was happening outside and not just inside."

Liam Fox has been more visible at Westminster in recent days, after a long period of keeping his head down. On Tuesday night he attended the launch event of the Trade Union Reform Campaign, a Tory-led attempt to ban taxpayers funding union reps in the public sector. He is one of the more prominent backers of the campaign, which has the support of many members of the cabinet.