Cameron rules out ransom for British hostage held by IS

UK Prime Minister David Cameron today ruled out paying ransom to secure the release of a British hostage being held by Islamic State (IS) militants.

Speaking in the House of Commons, Cameron stressed that the UK will not "waver" in its aim to defeat terrorism and that every possible option will be considered to protect the British man even as he condemned the "barbaric" beheading of a second US hostage.

"There is no doubt in my mind that the many tens of millions of dollars that ISIL (IS) have raised from ransom payments is going into promoting terrorism including terrorism affecting our own country," he said.

IS terrorists threatened to kill a British hostage in a video of US journalist Steven Sotloff's death unless US air strikes in Iraq are stopped.

The British hostage has family in Scotland but relatives do not want him named.

An IS video posted online two weeks ago showed the killing of another US journalist, James Foley.

The British hostage appears at the end of the latest video, released yesterday and titled 'A Second Message To America'.

The US has confirmed the video is authentic. Asked if Britain will try to "extricate" the British hostage, UK Foreign Secretary Philip Hammond referred to the previous failed attempt to rescue him.

"You are aware of course of the rescue attempt that took place some time ago, unfortunately unsuccessfully. You wouldn't expect me to discuss the various options we will be considering, but I can assure you we will look at every possible option to protect this person," he said.