A video has been posted on the internet showing British aid convoy volunteer Alan Henning being beheaded by an Islamic State militant.
The video titled "Another Message to America and Its Allies" shows 47-year-old Mr Henning kneeling in front of the knife-wielding militant, before being beheaded in front of the camera.
Mr Henning, a former taxi driver from Manchester, was captured by militants last December while delivering aid in Syria.
Family, friends and colleagues have made repeated calls for him to be released.
At the end of the 1 minute video another hostage - a former US soldier - is paraded in front of the cameras.
The hostage is believed to be Peter Edward Kassig who had returned to the region as a charity worker, after serving in Iraq in 2007.
The militant in the video says Mr Kassig will be the next victim.
Commenting on the latest beheading of a British citizen Prime Minister David Cameron said: "The brutal murder of Alan Henning by ISIS shows just how barbaric and repulsive these terrorists are.
"My thoughts and prayers tonight are with Alan's wife Barbara, their children and all those who loved him.
"Alan had gone to Syria to help get aid to people of all faiths in their hour of need.
"The fact that he was taken hostage when trying to help others and now murdered demonstrates that there are no limits to the depravity of these ISIL terrorists.
"We will do all we can to hunt down these murderers and bring them to justice."
A Foreign Office spokesman said: "We are aware of the video and are working urgently to verify the contents.
"If true, this is a further disgusting murder. We are offering the family every support possible; they ask to be left alone at this time."
MPs have condemned the savage murder, with Liberal Democrat party president Tim Farron said: "Alan Henning should be remembered for what he was - a kind hearted, selfless man who wanted to help others. My prayers are with his family."
Labour's Pat McFadden said it was the "senseless killing of an innocent man. An attack on humanity."
Mr Henning was previously seen at the end of a video released last month following the beheading of fellow British captive David Haines.
Islamic State has previously released videos of the executions of US journalists James Foley and Steven Sotloff. The videos contain warnings for the US and UK to cease air strikes against Islamic State, and to stop arming Kurdish forces battling the militant group in Iraq.
Meanwhile, another video has emerged online purportedly showing a wounded Islamic State fighter with a British accent.
In the video, the militant appears unmasked, sitting in front of a wall with an AK47 rifle propped up to his side.
He says: "This is a message to that despicable swine David Cameron, you along with all the other western governments have decided to bomb the Islamic State.
"If you were real men, you would send all your forces down on the ground. You would not bomb us from the sky – you would send them all on the ground fighting us one by one. But you know in the hearts of your men, they're cowards."