The Government is calling for a United Nations resolution which would set out the requirements for responsible behaviour in space.
A draft UN resolution has been launched by the UK and it is hoped this will provoke discussion and an eventual agreement between countries.
The Foreign Office said there are currently "almost no meaningful constraints" on the use of new weapons or technology that could damage space systems.
It also warned that the "risk of accidents, misunderstandings and miscalculations is escalating".
It comes after the UK and US accused Russia of launching an anti-satellite weapon into space - something which Moscow denied.
The Foreign Office said the proposal offers a new way to "break the impasse on space at the UN, increase transparency, and reduce the risk of miscalculation between nations".
Countries will be able to submit their views to the UN Secretary General before they are included in a report to the UN General Assembly.
The department warned military and security threats in space can lead to "large-scale disruption" around the world.
Many countries use military satellite systems for battlefield communications and missile systems, which are vulnerable to attack from both space and Earth-based interference and malign activity.
The Foreign Office added when countries do not communicate their intentions in space, or act in a threatening way, there is an increased risk of retaliation, and potentially devastating consequences.
Defence Secretary Ben Wallace said preventing these consequences is important for the UK's safety and the success of military operations that rely on space.
"Conflict in space has potentially profound consequences, and all powers should recognise the importance of this not only to their economies, but to global security," he said.
Foreign Secretary Dominic Raab added: "We believe a new approach is urgently needed to increase trust and confidence between countries operating in space to prevent an arms race or a conflict that could have catastrophic consequences."
Cover image: View of Earth from space (Picture: UK Space Agency).