David Cameron has condemed the "sickening and brutal" murder of US journalist Steven Sotloff by a man he said appears to be a British citizen.
Addressing MPs in the House of Commons, the PM added that the ordeal of a British hostage understood to be held by the same group of Islamic State (IS) militants was "unimaginable".
In a video showing the purported murder of Mr Sotloff, the killer showed another hostage described as British.
Mr Cameron said: "This country will never give in to terrorism. Our opposition to ISIL (Islamic State) will continue at home and abroad.
"It makes no distinction between cultures, countries and religions. There is no way to appease it; the only way to defeat it is to stand firm and to send a very straightforward message.
"A country like ours will not be cowed by these barbaric killers. If they think we will weaken in the face of their threats, they are wrong; it will have the opposite effect."
The Prime Minister told MPs: "(The killing) again appears to have been carried out by a British citizen", referring to the man also seen in the beheading video of US journalist James Foley.
Defence Secretary Philip Hammond was among Cabinet members at an emergency Cobra meeting this morning on how to save the Briton - who is not being named by UK news organisations.
"Every possible option" was being considered to free the hostage, said Mr Hammond, adding that the killing of Mr Sotloff would not change the Government's overall strategy on Iraq.
British forces are currently helping with reconnaissance and aid missions in the country and the Government is also arming Kurdish forces.
The US has launched airstrikes against IS in Iraq and there are suggestions the UK should consider tougher action.
Former Security and Counter-Terrorism Minister Lord West cautioned against a "knee jerk" response, but told Sky News: "If a group decides to start killing British citizens - and that group also threatens our nation - it means we're in a very different game from intervening, for example, in Syria."
Philip Hammond said airstrikes had not been ruled out to help Iraq's government fight off IS militants.
"If we judge that airstrikes could be beneficial, could be the best way to do that, then we will certainly consider them but we have made no decision to do so at the moment."
The Government has known about the hostage for some time and said previous Cobra meetings had been held on the matter.
Sky's Political Correspondent Anushka Astahna said officials had been worried publicity could have added a "premium" to the hostage's life and endangered the person further.
The Prime Minister has also announced measures to counter the threat of British Jihadis returning from Iraq and Syria and carrying out attacks on home soil.
Police are to get powers to seize passports as fighters return to the UK, and Mr Cameron suggested they could even be barred from re-entering altogether.
At Prime Minister's Questions, Mr Cameron said the public were in favour of excluding Britons who fought for Islamic State but said there was a "gap" in the law that would need addressing.
"I do think there may be occasions where we need to exclude, so therefore we should fill that gap in our armoury. I believe it is legal and possible to do it."
Condemnation has come from all political corners, with Labour leader Ed Miliband speaking of the "cold-blooded brutality" of Islamic State.
Mr Miliband told the Commons the Government had his "full support" in the battle against the extremists, who have wreaked havoc on their way to seizing large areas of Iraq and Syria.
The video comes a day before world leaders, including US President Barack Obama, meet for a Nato summit in Newport, south Wales, where discussions on the Ukraine crisis are set to dominate.
During a visit to Estonia, President Obama said his country "will not be intimidated" by IS and promised "our reach is long and justice will be served".
https://uk.news.yahoo.com/pm-chairs-cobra-meeting-british-hostage-094908886.html
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