Phase field theory for fracture is developed at large strains with an emphasis on a correct introduction of surface stresses at nanoscale. This is achieved by multiplying the cohesion and gradient energies by the local ratio of the crack surface areas in the deformed and undeformed configurations and with the gradient energy in terms of the gradient of the order parameter in the reference configuration. This results in an expression for the surface stresses which is consistent with the sharp surface approach. Namely, the structural part of the Cauchy surface stress represents an isotropic biaxial tension, with the magnitude of a force per unit length equal to the surface energy. The surface stresses are a result of the geometric nonlinearities, even when strains are infinitesimal. They make multiple contributions to the Ginzburg-Landau equation for damage evolution, both in the deformed and undeformed configurations. Important connections between material parameters are obtained using an analytical solution for two separating surfaces, as well as an analysis of the stress-strain curves for homogeneous tension for different degradation and interpolation functions. A complete system of equations is presented in the deformed and undeformed configurations. All the nanoscale phase field parameters are obtained utilizing the existing first principle simulations for the uniaxial tension of Si crystal in the [100] and [111] directions.