Hostage Ken Bigley was feared dead today after a Middle East TV station reported it had video footage said to show his execution.
Abu Dhabi TV said the tape appeared to prove Mr Bigley had been killed.
The video showed six militants standing behind a hostage as he was beheaded, according to reports.
British diplomats were urgently trying to confirm that the 62–year–old engineer from Liverpool had been executed by his al-Qa'ida captors.
His brother Paul said he was praying the reports were not true.
The Foreign Office in London said: "We are trying urgently to corroborate reports that Mr Bigley has been killed, but have not yet done so.
"We are in close touch with Mr Bigley's family at this difficult time."
Reports that Mr Bigley's three–week long ordeal had come to a brutal end first surfaced on Abu Dhabi TV around lunchtime.
The station reported that informed sources in Baghdad had confirmed Mr Bigley had been killed by the militant group led by Abu Musab al–Zarqawi, who was filmed beheading two Americans snatched with Mr Bigley.
It later said it had footage to prove the claim.
There were also reports from the militant stronghold of Fallujah in Iraq that Mr Bigley had been beheaded yesterday afternoon in Latifiya near Baghdad.
There was no official confirmation in London or Baghdad.
Mr Bigley was kidnapped in Baghdad by the Tawhid and Jihad Group on September 16.
Within days fellow captives Jack Hensley and Eugene Armstrong were dead.
But his captors used Mr Bigley as a political pawn releasing videos of him pleading for his life and criticising Prime Minister Tony Blair.
There had been no direct word from the hostage since September 29 when a video of a tearful Mr Bigley appeared on al–Jazeera TV.
Kneeling behind bars he claimed his captors did not want to kill him and he accused Tony Blair of being a liar and doing nothing to secure his release.
On Monday this week his brother Paul Bigley said he believed Mr Bigley was now in the hands of a more moderate group in Iraq.
His comments came amid media reports in Kuwait claiming the fundamentalist Tawhid and Jihad group was considering selling him to another militant group.
The new captors were said to be the same organisation that released two Italian women last week in return for a large cash ransom, raising hopes that Mr Bigley could be freed in the same way.
Earlier today Holland–based Paul Bigley was still clinging to the hope that the handover had taken place.
But as he spoke British diplomats, fearing the worst, were urgently trying to discover Ken Bigley's fate.
Ken Bigley's ordeal has prompted an international campaign to secure his release, winning the backing of such diverse figures as Libya's Colonel Gaddafi, Palestinian leader Yasser Arafat and Sinn Fein's Gerry Adams.
Earlier this week Mr Bigley was granted an Irish passport in a desperate attempt to convince his captors that he was not a British citizen.
The ordeal has taken its toll on his Irish–born mother Lil, 86, who has been treated in hospital several times.
A nurse was seen entering her Liverpool home this afternoon as the family awaited further news.
And the wait has been agony for Mr Bigley's Thai–born wife Sombat, who has made emotional appeals for mercy.
Mr Bigley was captured just weeks before his official retirement when he would have joined her in Thailand.
Lil Bigley was this afternoon thought to be at the family home in Walton, Liverpool, with her other sons Stan, 65, and Philip, 49.
Philip Bigley arrived at around 1pm shortly after news of the TV report in Abu Dhabi emerged.
A policewoman was stationed outside the house with TV cameras and reporters waiting for more news in the street.
It was not known where Ken Bigley's son, Craig, 33, was.
It is thought that the family have no plans to comment on the reports until there is confirmation.Reuse content