David Cameron has vowed that Britain will "hunt down" those responsible for the murder of British aid worker David Haines and bring them to justice.
Speaking from Downing Street after chairing a meeting of Cobra, Mr Cameron described Islamic State extremists as "monsters" who are part of a "fanatical organisation".
"We will hunt down those responsible and bring them to justice, no matter how long it takes," Mr Cameron said.
"David Haines was an aid worker. He went into harm's way, not to harm people but to help his fellow human beings in the hour of their direst need, from the Balkans to the Middle East.
A man wearing black addresses David Cameron in the video"David Haines was a British hero. The fact that an aid worker was taken, held and brutally murdered at the hand of Islamic State sums up what this organisation stands for.
"They boast of their brutality. They claim to do this in the name of Islam. That is nonsense - Islam is a religion of peace."
Earlier in the day Mr Cameron held emergency talks with senior representatives of the military, the security services, the Foreign Office and the Home Office.
He returned to Downing Street shortly after midnight when IS released a video which showed Mr Haines' death.
David Haines has been described as a 'British hero' (Pic: Lance Baldwin)Government sources say the death will not change Britain's policy and Parliament will not be recalled.
But Mr Cameron said Britain's security depends upon taking action against the extremists.
"It must strengthen our resolve. We must recognise that it will take time to eradicate a threat like this. It will require, as I have described, action at home and abroad," he said.
"This is not something we can do on our own. We have to work with the rest of the world.
"Ultimately, our security as a nation, the way we go about our everyday lives in this free and tolerant society that is Britain, has always depended on our readiness to act against those who stand for hatred and who stand for destruction."
Mr Haines was taken hostage in Syria last yearThe footage of Mr Haines' death shows a knife-wielding militant who speaks with a British accent.
The clip also includes a threat to kill a second hostage, later named as Alan Henning, another British aid worker.
In the video, the victim looks into the camera and makes a statement, holding Mr Cameron responsible for his own "execution".
In the statement, which appears to have been made under duress, he said: "You entered voluntarily into a coalition with the United States against the Islamic State just as your predecessor Tony Blair did, following a trend against our British prime ministers who can't find the courage to say 'no' to the Americans.
"Unfortunately it is we the British public that in the end will pay the price for our Parliament's selfish decisions."
Mr Cameron returned to Downing Street for crisis talksA Foreign Office spokesperson said: "All the signs are that the video is genuine. We have no reason to believe it is not."
The aid agency that Mr Haines was working for when he was taken hostage in 2013 said it was "appalled and horrified" by the killing.
"ACTED strongly condemns with the utmost of force these crimes. In this tragic moment, our thoughts are with his family, friends and loved ones," the agency said.
The killing comes just weeks after American journalists James Foley and Steven Sotloff were beheaded by Islamic State (IS). Those deaths were also filmed, and the videos were released on the internet.