Peter Westmacott said British intelligence chiefs are not far away from naming the man in the video released by Islamic State militants last week. Mr Westmacott said the Isis (Islamic State) militant, dubbed Jihadi John, is being identified using voice- recognition technology and wider intelligence. He said: "We're putting a lot into it."
He could not elaborate on the killer's identity. He added the problem "goes beyond one horrendous criminal", saying: "People think maybe as many as 500 British subjects have gone to Syria and Iraq for this cause of jihad.
"There are more going from other European countries, too, and this is a betrayal of all our values.
"All Western countries have a small number who have become radicalised or brainwashed enough to take up this cause. But this is not the majority and the Muslim Council of Britain has come out formally against this."
Intelligence sources have claimed Isis is a potential threat to Britain and the West, citing recent attacks in Belgium and France.
Foreign Secretary Phillip Hammond said "sooner or later [the terrorists] will seek to strike us on British soil". Yesterday, Iraq's prime minister-designate, Haider al Abadi, used a meeting with the visiting Iranian foreign minister to call for greater international efforts to destroy the Islamist group.
The group's advance has already prompted the first American airstrikes in Iraq since US forces pulled out in 2011.
However, with Isis now in control of vast areas of northern Iraq, US Republicans have called for more aggressive action to defeat them.
Fighting in the region continued over the weekend with bombings killing at least 35 people on Saturday in apparent revenge attacks after Shi'ite militiamen machine-gunned a Sunni Muslim mosque in Diyala province on Friday, killing 68 worshippers and deepening the country's sectarian conflict.
The violence continued yesterday, when a car bomb killed seven people in a mostly Shi'ite area of Baghdad, police and medical sources said.
Meanwhile, terror experts have warned that up to 30 Scots have travelled to join jihadi extremists in Syria and Iraq.
Leading analysts said dozens of home-grown radicalised Muslims have already answered the call to arms from Isis.
They spoke out as counter-terrorism officers said it would be "foolish to discount the fact" that some extremists would be Scots.
Detective Chief Superintendent John Cuddihy, of Police Scotland's Organised Crime and Counter Terrorism team, said: "There have been significant efforts here in Scotland to put in place strong security arrangements.
"We are also working tirelessly to identify people with links to Scotland who may have gone out there to fight and to make sure that we deal with the implications if, indeed, they return."
Magnus Ranstorp, former director of the Centre for the Study of Terrorism and Political Violence at St Andrews University, added: "The exact numbers are obviously impossible to quantify - I would estimate there are around 30 Scots over there.
"Radicalisation is very individualised and is unique to your personal circumstance.
"One issue that's also very important is you will have radicalisers and recruiters who will give them practical help as well as indoctrinate."