HMS Montrose drove off three Iranian boats in the Gulf earlier this week (Picture: Royal Navy).
Recent events in the Gulf show the need for extra investment in the Royal Navy, according to Jeremy Hunt.
His comments come after a Royal Navy warship saw off three Iranian boats, which the Ministry of Defence (MOD) said were trying to impede a British tanker sailing through the Strait of Hormuz.
On Twitter, the Tory leadership contender said 'the Navy has been run down too much'.
Mr Hunt, who has already vowed to increase defence spending by £15 billion over the next five years, also pledged to review the size of the Navy.
He said: "We need to show confidence in the world by putting our money where our mouth is!
"What is first duty of Government? To keep its citizens safe. Not possible if we continue to under-invest in our armed forces.
"Time to put things right and show the world we are a country that will always fight for our values."
The Foreign Secretary said if he becomes prime minister he will look at adding more Type 31 frigates or offshore patrol vessels.
Mr Hunt also said he wanted to see more F-35B Lightning jets on the Navy's aircraft carriers.
Boris Johnson, Mr Hunt's leadership rival, said he too would increase the UK's defence budget.
On Thursday, an MOD spokesman said warship HMS Montrose was "forced" to position herself between three Iranian boats and the British tanker.
It is believed the boats belonged to the Iranian Revolutionary Guard Corps.
However, Iran has denied any involvement.
Last week, Royal Marines seized an Iranian tanker near Gibraltar as it was believed to be carrying oil to Syria in breach of EU sanctions.
Iran denied this was the case and threatened to retaliate, stating Britain will face "repercussions".
On Thursday, Police in Gibraltar arrested the vessel's captain and chief officer.
The latest incident in the Gulf comes amid rising tensions between the US and Iran, after President Donald Trump pulled out of the 2015 nuclear deal and reimposed sanctions.