To end all confusion:
The Union Jack or Union Flag
When the 'Union Jack' was first introduced, in 1606, it was known simply as 'the British flag' or 'the flag of Britain', and was ordered to be flown at the main masthead of all ships, warships and merchant ships, of both England and Scotland.
The first use of the name 'Union' appears in 1625. There are various theories as how it became known as the 'Union Jack', but most of the evidence points to the name being derived from the use of the word 'jack' as a diminutive. This word was in use before 1600 to describe a small flag flown from the small mast mounted on the bowsprit, and by 1627 it appears that a small version of the Union flag was commonly flown in this position. For some years it was called just 'the Jack', or 'Jack flag', or 'the King's Jack', but by 1674, while formally referred to as 'His Majesty's Jack', it was commonly called the Union Jack, and this was officially acknowledged.
In the 18th century the small mast on the bowsprit was replaced by staysails on the stays between the bowsprit and the foremast. By this time the Ensign had become the principal naval distinguishing flag, so it became the practice to fly the Union Jack only in harbour, on a specially rigged staff in the bows of the ships, the jackstaff. It should thus be noted that the jack flag had existed for over a hundred and fifty years before the jack staff came into being, and its name was related to its size rather than to the position in which it was flown.
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".
Cdr. Bruce Nicolls, O.B.E., R.N. (Retd)