A Downing Street spokesman said: "The Prime Minister was saddened and dismayed by the news that the remains of two bodies have been passed to the British embassy in Baghdad. His thoughts are with the families of the five men who were taken hostage in 2007.
"We reiterate our call for the release of all of the men and are working intensively with the Iraqi authorities towards that goal."
David Miliband, the Foreign Secretary, said the bodies had not been formally identified, but added: "Our immediate thoughts are clearly with the families of the five Britons."
The Foreign Office said all the families had been told about the bodies, thought to be two of the five missing men, which were taken to the British embassy late on Friday night.
Forensic teams in Baghdad are testing the remains with the hope of identifying them and discovering the cause of death. Reports suggested that the condition of the bodies implied the hostages had been dead for some time.
Mr Miliband admitted yesterday that the threat to the remaining three hostages – if the two bodies are indeed two of the five men taken – remained "very high indeed", while calling again for the "immediate safe release of all the remaining hostages." He added: "I also confirm that we are working intensively towards that goal."
The shadow Foreign Secretary, William Hague, said: "This is deeply sad and distressing news, in particular for the families who have been waiting so long to know what has happened to their loved ones."
Only one of the five hostages has been named formally: Peter Moore, a computer expert, was kidnapped, along with his four security guards, while working in Iraq's Finance Ministry in May 2007 by armed men in police uniforms. Just two weeks ago, hopes rose that the release of one of the five might be imminent after the US military freed Laith al-Khazali – a senior Shia militia leader.
Graeme Moore, Peter's father, attacked the Foreign Office last night for not keeping families informed about latest developments. "The Foreign Office hardly talks to me," he said. "The police came this morning [Saturday] to read Miliband's statement. Miliband said his thoughts were with the families, but no one from the Foreign Office has been in touch with me."
Mr Moore senior, 59, a delivery driver who lives near Leicester, said he would probably have to rely on his "own sources in Baghdad" to find out if one of the bodies was that of his son: "The bodies are said to be some months old, which means they would have been dead in March when one of the prisoners was released in Iraq and we were hopeful he'd be released."
He criticised the Government's attempts to get his son released, claiming: "I believe they could have had the hostages released within the first month if they wanted to."
Yesterday's news was a particularly harsh blow to the five men's families because, as recently as March, video footage had suggested that all the men were together. This had raised hopes that all five were still alive, despite claims last year that one, known only as Jason, had committed suicide. At least four videos of the five Britons have been released by their captors – a group known as the Islamic Shiite Resistance in Iraq.
Mr Miliband reiterated that the Government would not give in to the hostage-takers' demands, which included the release of several militants, including the leader of Asaib al-Haq, an Iranian-backed militia group.
Fears that two hostages were dead came as a truck bomb exploded near Kirkuk in the north of Iraq, killing 70 people and injuring 200 – the deadliest blast for nearly two months. The bomb comes barely a week ahead of a deadline for US troops to withdraw from Iraq's cities, towns and villages as part of a security accord signed between Washington and Baghdad in November.
Little is known about the security men kidnapped with Mr Moore except that they were working for the Canadian security company GardaWorld. Two, Alex and Jason, are Welsh, and two others, Alan, and another man called Jason, are Scottish.
Joe Gavaghan, PR executive for GardaWorld, insisted families were not giving up hope, and said: "We will be working with the families to ensure we can do everything we can for them."
Most of the men's families have heeded Foreign Office advice not to talk to the media, in the hope that it would help negotiators secure the men's release. The hostage takers had said they did not want publicity.
The mother of Alex, a bodyguard from south Wales said: "We are anxious about the situation, yes. We have heard nothing new from the Foreign Office, but we are hoping for the best."
The war in Iraq has seen more than 200 foreigners taken hostage, including eight Britons, and many more Iraqis. Margaret Hassan and Ken Bigley were killed in 2004. James Brandon, Gary Teeley and Phillip Sands escaped with their lives after a couple of days at the mercy of Iraqi gunmen, but aid worker Norman Kember spent four months in captivity before being freed in a daring raid by coalition forces.
Two years in captivity
May 2007 Five Britons – computer instructor Peter Moore and four bodyguards – kidnapped in Baghdad.
December 2007 Kidnappers warn that one hostage will be killed "as a first warning" unless British troops are withdrawn from Iraq.
February 2008 Video released showing Mr Moore asking Gordon Brown for help.
July 2008 The kidnappers claim that a hostage, known only as "Jason", had killed himself on 25 May.
19 June 2009 The remains of two bodies are passed to Britain by the Iraqi authorities. Yesterday the Foreign Secretary, David Miliband, says that they are believed to be those of two of the hostages.
The hostages
Kenneth Bigley 62, a civil engineer from Liverpool, was decapitated by Iraqi insurgents on 7 October 2004, a month after his capture. A video released by his captors showed the killing.
Margaret Hassan 59, director of Care International, was seized in Baghdad on 19 October 2004. Despite begging for her life on video, she was killed after four weeks and footage of her murder released.
Peter Moore IT consultant, and his four bodyguards were kidnapped on 29 May 2007, by armed men outside the Finance Ministry in Baghdad. They have only been seen since in videos.
