Taken from a website about "How to draw the Union Jack — accurately"
"It is often stated that the Union Flag should only be described as the Union Jack when flown in the bows of a warship, but this is a relatively recent idea. From early in its life the Admiralty itself frequently referred to the flag as the Union Jack, whatever its use, and in 1902 an Admiralty Circular announced that Their Lordships had decided that either name could be used officially. Such use was given Parliamentary approval in 1908 when it was stated that “the Union Jack should be regarded as the National flag”.
However, the Royal Navy disagrees:
The national flag of the United Kingdom is worn as a Jack at the bow by all HM ships in commission when alongside or when ‘dressed overall’. This is the only occasion when it is correctly called the Union Jack, although it is generally known by this name through common usage. It is also flown during Courts Martial and is the Distinguishing Flag of an Admiral of the Fleet.
The author enquired of the Royal Navy about this apparent disagreement, asking which of the Flag Institute and the Royal Navy is right? The Naval Historic Branch, of 3-5 Great Scotland Yard London SW1A 2HW, answered as follows:
Both and neither. A jack is a sea flag, a small flag, generally rather square in its proportions, flown from a flagstaff rigged on the bowsprit or stem of the vessel. The earliest known reference to a ‘jack’ of such a type occurs in 1633, the first reference to the Union (rather than the ‘Britain’ or ‘British’ flag) dating from 1625 - the Union Flag and the naval jack are much the same age. The jack was initially simply a particular instance of the Union Flag, but as the distinctive flag of warships it quickly became an exceptionally well-known instance. Technically, all Union Jacks are Union Flags, but not vice versa. It is a fine point and one that was much argued over, but it is beyond question that the habit of treating the two terms as interchangeable developed early, and it would not be difficult to multiply instances of individuals who undoubtedly did understand the distinction nevertheless following common usage and using the term Union Jack when Union Flag is clearly meant.
The RN website is quite right in that the Union Jack flown in the bows of commissioned ships is the only one which really is a jack (unless you count the white-bordered pilot jack), but not quite so on that being the only occasion when it is ‘correctly’ so called - because the Flag Institute is right that the use of Union Jack to mean any Union Flag has been sanctioned both by the Admiralty and by Parliament. Equally, it is questionable to suggest that the distinction between Union Jack and Union Flag is of particularly recent origin - the Union Flag was also employed as a command flag, and there was (and is!) a necessary differentiation to be made, so it is possible that both websites could have chosen their words better, but it would also be difficult to avoid questions like this arising without going into quite inordinate detail. "