More than 100 foreign spy agencies were working to gain access to U.S. computer systems, as were criminal organizations, said James Miller, principal deputy under secretary of defense for policy.
Terrorist groups also had cyber attack capabilities.
"Our systems are probed thousands of times a day and scanned millions of times a day," Miller told a forum sponsored by Ogilvy Washington, a public relations company.
He said the evolving cyber threat had "outpaced our ability to defend against it."
"We are experiencing damaging penetrations -- damaging in the sense of loss of information. And we don't fully understand our vulnerabilities," Miller said.
His comments came as the Obama administration develops a national strategy to secure U.S. digital networks and the Pentagon stands up a new military command for cyber warfare capable of both offensive and defensive operations.
The Senate last week confirmed National Security Agency Director Keith Alexander to lead the new U.S. Cyber Command, which will be located at Ft. Meade, Maryland, the NSA's headquarters.
Miller suggested the new organization, which is expected to be fully operational in October, had its work cut out for it.
Among its challenges are determining what within the spectrum of cyber attacks could constitute an act of war.
Miller said the U.S. government also needed to bolster ties with private industry, given potential vulnerabilities to critical U.S. infrastructure, like power grids and financial markets.
STAGGERING LOSS
Hackers have already penetrated the U.S. electrical grid and have stolen intellectual property, corporate secrets and money, according to the FBI's cybercrime unit. In one incident, a bank lost $10 million in cash in a day.
"The scale of compromise, including the loss of sensitive and unclassified data, is staggering," Miller said. "We're talking about terabytes of data, equivalent to multiple libraries of Congress." reuters
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