THE Government reserves the right to take action to stem any immediate humanitarian crisis on the ground in Iraq.

Amid speculation Britain could soon join air strikes to deal with the growing militant threat from IS or Isil - Islamic State of Iraq and the Levant - George Osborne said yesterday: "We haven't ruled things out, but let's be clear we're not at that stage today."

His comments came as US ­president Barack Obama prepares to lay out a strategy to defeat IS militants in the Middle East. The president will meet congressional leaders tomorrow and give a speech on Wednesday, the eve of the 13th anniversary of the terrorist destruction of the twin towers in New York and the attack on the Pentagon.

Mr Obama's emerging strategy depends on the formation of a new government in Iraq, as well as co-operation from Saudi Arabia, Jordan and Turkey. He said he expected the new Iraqi government to be formed this week.

"What I want people to understand is that over the course of months, we are going to be able to not just blunt the momentum of Isil," he said, "we are going to systematically degrade their ­capabilities. We're going to shrink the territory they control. And ultimately we're going to defeat them."

Earlier, Mr Osborne, speaking on BBC One's The Andrew Marr Show, underlined the "direct threat" to British security posed by IS but emphasised the Iraqi government's role in defeating the organisation.

He said: "We absolutely need to defeat this Islamic terrorist ­organisation, it is a direct threat to the security of people living in Britain, as well as, of course, an enormous threat to stability in the Middle East.

"It needs to be defeated, there are already American air strikes, but they are in the context actually of a locally-led operation by the Iraqi people, by other countries in the neighbourhood, so this is very different from 10 years or so ago with the Iraq war, where it was a Western invasion.

"This is an operation by the Iraqi government, which by the way needs to be more representative, it's an operation from people in the Middle East to destroy this threat, which we will assist in any way that we can and in a way that helps them with their cause."

He added: "On the question of air strikes we are not at that stage today, we haven't ruled things out, but let's be clear we're not at that stage today. We need to work out what we can do as a country to best help defeat this threat to our security and the threat to the security around the world."

Meanwhile, the wife of the Scots aid worker being held hostage by Islamic State militants spoke of her family's ordeal. David Haines, 44, is being held by IS and his life was threatened in a video released by the group of the beheading of US journalist Steven Sotloff last week. Mr Haines's family remains under police protection in Croatia.

His wife, Dragana Prodanovic Haines, 44, said: "He's everything to us. He's our life. He's a fantastic man and father. Nobody can understand how we are feeling. My daughter keeps asking about him every day.

Images published on social media on Saturday appeared to show Islamic State militants beheading a captive Lebanese soldier. Zeinab Noun, the mother of the 20-year-old soldier, Abbas Medlej, said the photographs appears to be real and her son had been "sacrificed".

He was among a group of 19 soldiers missing since the attack on Arsal last month by militants including fighters affiliated with Islamic State.