The Foreign Office said tonight it was "working urgently to verify" a video purporting to show the beheading of British aid worker David Haines in Syria.
Islamic State (IS) extremists have released footage claiming to show the beheading of Mr Haines, 44, who was raised and educated in Perthshire, and was captured by the terrorist group in Syria last March.
IS had threatened to kill the father of two if world leaders did not agree to their demands.
A spokeswoman for the Foreign Office said: "We are aware of the video and are working urgently to verify the contents."
The news came hours after the family of Mr Haines issued a plea to his captors to contact them.
The graphic video begins with a clip from David Cameron and then features a man appearing to be Mr Haines dressed in orange overalls and kneeling down in front of a man holding a knife.
The victim looks into the camera and says: "My name is David Cawthorne Haines. I would like to declare that I hold you David Cameron entirely responsible for my execution.
"You entered voluntarily into a coalition with the United States against the Islamic State just as your predecessor Tony Blair did, following a trend against our British prime ministers who can't find the courage to say no to the Americans.
"Unfortunately it is we the British public that in the end will pay the price for our Parliament's selfish decisions."
The militant, who appears to have a British accent, is recorded as saying: "This British man has to the pay the price for your promise, Cameron, to arm the Peshmerga against the Islamic State.
"Your evil alliance with America which continues to strike the Muslims of Iraq and most recently bombed the Haditha Dam will only accelerate your destruction and playing the role of the obedient lapdog Cameron will only drag you and your people into another bloody and unwinnable war", the militant continues.
The video then appears to show the man take a knife to Mr Haines' throat, before the victim's dead body is shown.
The militant added: "If you, Cameron, persist in fighting the Islamic State then you like your master Obama will have the blood of your people on your hands."
Militants from Islamic State previously beheaded two American journalists, posting the evidence online in gruesome videos featuring a masked jihadist with a British accent.
The Foreign Office said Mr Haines's family wish to be left alone. A spokeswoman said: "If true this is another disgusting murder. We are offering the family the family every support possible.
"They ask to be left alone at this time."
Mr Haines has a teenage daughter in Scotland from a previous marriage and a four-year-old daughter in Croatia from his present marriage.
Educated at Perth Academy, he has worked for aid agencies in some of the world's worst trouble spots, including Libya and South Sudan.
He was in Libya during its civil war in 2011, working as head of mission for Handicap International, which helps disabled people in poverty and conflict zones around the world.
ACTED has previously said that the threats made to his life were "intolerable".
In a statement, it said: "ACTED strongly condemns the violence and threats against David. A man's life should never be threatened on account of his humanitarian commitment."
The charity said Mr Haines had worked as "a humanitarian" since 1999, helping people in the Balkans, the Middle East and Africa.
When he was taken by jihadists in Syria he was working to help "tens of thousands of people affected by the crisis" created by the long-running civil war.
Colonel Richard Kemp, former commander of British forces in Afghanistan, said: "Having worked in British Government on hostage rescue I know how much effort has gone in to saving David Haines. Now is the time for retribution."
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