diff --git a/src/fox b/src/fox
index 67b28ffe7..5ad1c47f2 160000
--- a/src/fox
+++ b/src/fox
@@ -1 +1 @@
-Subproject commit 67b28ffe75d434bfc59aab7db8ec23d02ed195ca
+Subproject commit 5ad1c47f266aa935d8262201dcac0b124ad9b02d
diff --git a/src/libAtoms/System.F90 b/src/libAtoms/System.F90
index 249218f3b..affc1377a 100644
--- a/src/libAtoms/System.F90
+++ b/src/libAtoms/System.F90
@@ -48,6 +48,7 @@
 module system_module
   use error_module
   use kind_module
+  use m_common_error, only: FoX_set_error_handler
 !$ use omp_lib
 #ifdef _MPI
 #ifndef _OLDMPI
@@ -2320,8 +2321,22 @@ subroutine system_initialise(verbosity,seed, mpi_all_inoutput, common_seed, enab
 
     system_quippy_running = optional_default(.false., quippy_running)
 
+    ! Route FoX parse errors through system_abort so they propagate to
+    ! Python as exceptions (libAtoms/QUIP#724). The handler is installed
+    ! unconditionally -- non-quippy callers still get system_abort, which
+    ! preserves the historical "abort on XML parse error" behaviour.
+    call FoX_set_error_handler(system_fox_error_handler)
+
   end subroutine system_initialise
 
+  !% FoX error handler bridge: route FoX parse errors through system_abort
+  !% so they reach Python as exceptions when running under quippy
+  !% (see libAtoms/QUIP#724).
+  subroutine system_fox_error_handler(msg)
+    character(len=*), intent(in) :: msg
+    call system_abort('FoX: '//trim(msg))
+  end subroutine system_fox_error_handler
+
   subroutine get_mainlog_errorlog_ptr(mainlog_ptr, errorlog_ptr)
     type inoutput_ptr
        type(inoutput), pointer :: p
diff --git a/src/libAtoms/meson.build b/src/libAtoms/meson.build
index 8f4d8a7ca..9bf96a531 100644
--- a/src/libAtoms/meson.build
+++ b/src/libAtoms/meson.build
@@ -83,6 +83,7 @@ libAtoms = library('libAtoms',
     blas_dep,
     mpi_dep,
     ],
+  link_with: [fox],
   c_args: ['-DPROTOTYPES=1'],
   link_args: libatoms_link_args,
   override_options: ['b_lundef=false'],  # Allow undefined symbols
diff --git a/src/meson.build b/src/meson.build
index 7636134d3..53257ba9e 100644
--- a/src/meson.build
+++ b/src/meson.build
@@ -1,5 +1,5 @@
-subdir('libAtoms')
 subdir('fox')
+subdir('libAtoms')
 
 if get_option('gap')
   subdir('GAP')
diff --git a/tests/test_fox_xml_errors.py b/tests/test_fox_xml_errors.py
new file mode 100644
index 000000000..504251d35
--- /dev/null
+++ b/tests/test_fox_xml_errors.py
@@ -0,0 +1,72 @@
+#!/usr/bin/env python3
+"""
+Regression test for https://github.com/libAtoms/QUIP/issues/724
+
+Invalid XML passed to quippy.potential.Potential(param_filename=...) must raise
+a catchable Python exception. Previously, FoX's error handler called Fortran
+`stop` directly, silently killing the Python process before any try/except
+could run.
+
+The test runs the user's reproducer in a subprocess because, in the RED state,
+the bug terminates the interpreter; an in-process assertRaises would crash the
+whole test runner instead of failing one test.
+"""
+
+import os
+import subprocess
+import sys
+import tempfile
+import textwrap
+import unittest
+
+
+class TestFoxXmlErrors(unittest.TestCase):
+
+    def _run_reproducer(self, args_str):
+        """Run a tiny quippy script in a subprocess and return its result.
+
+        The script writes a non-XML file, then tries to load it as a Potential
+        param_filename. It prints CAUGHT:<exc-type> on a Python exception,
+        NO_EXCEPTION if Potential() returned without raising.
+        """
+        with tempfile.TemporaryDirectory() as tmpdir:
+            bad_xml = os.path.join(tmpdir, "bad.xml")
+            with open(bad_xml, "w") as fh:
+                fh.write("pair_style lj/cut 3.5\n")
+
+            code = textwrap.dedent(f"""
+                import sys
+                from quippy.potential import Potential
+                try:
+                    pot = Potential({args_str!r}, param_filename={bad_xml!r})
+                    print("NO_EXCEPTION")
+                except BaseException as e:
+                    print("CAUGHT:" + type(e).__name__ + ":" + str(e)[:200])
+                    sys.exit(0)
+            """)
+
+            return subprocess.run(
+                [sys.executable, "-c", code],
+                capture_output=True,
+                text=True,
+                timeout=120,
+            )
+
+    def test_invalid_xml_raises_python_exception_sw(self):
+        """IP SW with a non-XML param file must raise, not silently exit."""
+        result = self._run_reproducer("IP SW")
+        self.assertIn(
+            "CAUGHT:",
+            result.stdout,
+            msg=(
+                "Expected Python exception from invalid XML.\n"
+                f"returncode={result.returncode}\n"
+                f"stdout={result.stdout!r}\n"
+                f"stderr={result.stderr!r}"
+            ),
+        )
+        self.assertNotIn("NO_EXCEPTION", result.stdout)
+
+
+if __name__ == "__main__":
+    unittest.main()