Lord David Alton was speaking at the launch of an All Party Parliamentary Group (APPG) report he was apart of, which is urgently calling on the UK to formally recognise that all Christians in the country, as well other minorities, face "a real risk of persecution".
Current legal guidance used by the Home Office does not currently acknowledge all believers in Pakistan as facing this level of threat because of their faith in Christ.
Under Pakistan's blasphemy laws, a person can be sentenced to death for insulting the Prophet Muhammad. The laws are often used to target Christians.
If Britain was to change it's default stance, it could lead to greater pressure being put on Pakistani authorities to change the country's blasphemy laws and better protect minorities.
It could also lead to more suffering Pakistani Christians being granted asylum, and for those processes to be handled more quickly.
The report also urges the UK government to make sure aid money it gives to Pakistan does not accidentally fuel Christian persecution, by going to organisations which do not respect freedom of religion - something enshrined in Pakistan's constitution.
According to Lord Alton, Pakistan is the biggest recipient of British bilateral aid in the world, receiving more than £1bn from the United Kingdom in the last two years.
In an exclusive interview with Premier at the report's launch in the House of Lords, he told us: "The UK government is living in a fantasy world if they don't think that there is outright persecution in Pakistan.
"Tell that to the children who watched the mob of 1200 people burn their parents alive in a kiln. Tell that to the Anglicans who were worshipping in their church in Peshawar, over a hundred of whom were murdered in a bombing. Tell it to the family of the Catholic Minister for Minorities Shahbaz Bhatti who was assasinated on the streets and still no one brought to justice."
The APPG report came after Lord Alton visited hundreds of Pakistani Christians detained in Thailand, who were waiting to see if they'd be granted asylum.
Thousands were being kept in Bangkok. At the detention centre Lord Alton visited, hundreds shared individual rooms and took it in turns to sleep on the floor because there wasn't enough space.
The Group then began formally investigating the plight of believers both inside and outside of Pakistan.
Referring to his conversations with them, Lord Alton told Premier: "People told me about how their homes had been burnt down, their churches had been bombed, people had been raped.
"We heard stories of forced conversion. It was a litany of horror."
And commenting on the amount on the aid Britain gives to Pakistan, he said: "It is incumbent on us to demand what is being done using our money to prevent the sources of hatred that lead to the persecution of these minorities.
"I wouldn't go as far as to say it's aiding and abetting outright persecution, but I would certainly say it is doing nothing to stop it."
Listen to Premier's Aaron James speaking to Lord David Alton in the House of Lords:
