Watch the video here
The footage appears to show a masked man - speaking in English with traces of a British accent - killing James Foley, who was seized by armed men in Syria in November 2012.
In the five-minute video, posted on social media sites by Islamic State sources, the group declares that Mr Foley was killed after Barack Obama ordered airstrikes against IS positions in northern Iraq.
The group also claimed to be holding another American journalist, Steven Sotloff, and said his life depended on the US president's next move.
White House National Security Council spokeswoman Caitlin Hayden said the administration had seen the video but had not yet confirmed its authenticity.
She said that if it is verified by the intelligence community, the US would be "appalled by the brutal murder of an innocent American journalist".
The "Find James Foley" campaign run by the 40-year-old's family to secure his release posted a public message on Facebook after the video was released asking for time to "seek answers".
Foley was an experienced correspondent who had covered the war in Libya before heading to Syria to follow the revolt against Bashar al Assad for the Global Post, AFP and other outlets.
According to witnesses, he was seized in the northern Syrian province of Idlib on November 22, 2012.
His family has not heard from him since, despite a public campaign for information.
source: guardian
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