A British man who was captured with two Americans in Iraq last month has been beheaded by an insurgent group led by the country's most wanted man, a Jordanian terrorist held responsible for a string of suicide bombings, abductions and murders.

British Prime Minister Tony Blair publicly denounced the killing of Kenneth Bigley as "barbaric" after his family received proof of his death.

A new video released today by Islamic militants in Iraq showed the beheading of Bigley, 62, a British engineer from Liverpool who was kidnapped from his house in Baghdad Sept. 16 along with two American civilian contractors. The Americans -- Eugene "Jack" Armstrong, 52, of Hillsdale, Mich., and Jack Hensley, 48, of Marietta, Ga. -- were decapitated last month, and gruesome videos of their murders were posted on an Islamic Web site.

In the latest video, Bigley, wearing an orange jump suit, was shown kneeling in front of six armed and hooded captors, news agencies reported. One of them read a statement in Arabic, then cut Bigley's head off with a large knife as three of the other men held the victim down.

Blair, appearing on national television in Britain, said, "I feel desperately sorry for Kenneth Bigley and his family, who have behaved with extraordinary dignity and courage" during the ordeal.

"I feel utter revulsion at the people who did this," Blair said. "Not just at the barbaric nature of the killing, but the way, frankly, they played with the situation over the past few weeks. . . ." He said he hoped "that the actions of these people, whether in Iraq or elsewhere, should not prevail over people like Ken Bigley, who after all only wanted to make Iraq and the world a better place."

Bigley's brother, Philip Bigley, said in a statement, "The family here in Liverpool believes that our government did all it possibly could to secure the release of Ken in this impossible situation." The statement added, "Our only consolation is that Ken is now at peace, away from those who are capable of such atrocities."

But another brother, Paul Bigley, said in a statement from his home in the Netherlands that "Mr. Blair has blood on his hands." He called the war in Iraq "illegal" and pleaded, "Please, please stop the war and prevent other lives being lost."

The Reuters news agency quoted guerrilla sources in Fallujah, a city west of Baghdad held by Sunni Muslim insurgents, as saying that Bigley was killed Thursday afternoon in Latifiya, a town about 20 miles south of the capital.

Reuters and the Associated Press quoted witnesses who said they viewed the video and saw Bigley being killed. Television stations in Abu Dhabi and Britain also reported that Bigley had been killed.

Abu Dhabi TV said in a statement that it had received a video of the beheading but decided not to broadcast it.

"Abu Dhabi TV refuses to serve as a mouthpiece for such groups or their actions," the statement said. "Abu Dhabi TV extends its sincere condolences to Mr. Bigley's family and renews its condolences to the families of all those killed in Iraq."

A group called Monotheism and Jihad, led by Jordanian Abu Musab Zarqawi, claimed responsibility for beheading the two Americans who were captured with Bigley. The same group last week released a video that showed Bigley pleading for his life.

The group demanded the release of Muslim women held by U.S. forces in Iraq. The U.S. military rejected the demand saying the only women in its custody were two Iraqi scientists involved in former president Saddam Hussein's biological weapons programs.

The British government had said it was willing to talk to kidnappers about freeing Bigley, but that it would never meet any political demands or pay ransom. Nevertheless, Bigley's family had expressed optimism that its pleas for his life would lead to his release.

British Foreign Secretary Jack Straw said today that the government had exchanged messages with Bigley's captors through a man who presented himself to the British Embassy in Baghdad earlier this week as a potential intermediary. Straw said the government tried to dissuade the captors from killing Bigley, but that they stuck to their demand for the release of women prisoners even though they knew there were no female detainees in British custody in Iraq.

Patricia Hewitt, a member of Blair's cabinet, said in a British television interview, "We cannot get into the business of negotiating with terrorists, with hostage takers, with these evil people who have inflicted such appalling suffering already on Ken Bigley and his family."

In the video released last week, Bigley, looking gaunt and broken and wearing an orange jump suit, sat chained in a small cage and wept intermittently as he begged for his life and denounced Blair.

The video showed Bigley with his hands manacled and chained around the neck and feet in such a way that he appeared unable to stand. He sat on the floor in a hunched position in one of three small makeshift cells formed by brick partitions and wire mesh.

"Tony Blair is lying," Bigley said to the camera in the video. "He is lying when he said he's negotiated. He has not negotiated. My life is cheap. He doesn't care about me."

He repeatedly pleaded for help, saying at one point, "I am begging you for my life. Have some compassion please."

Bigley and the two Americans, Armstrong and Hensley, worked for Gulf Services Co., a firm based in the United Arab Emirates. They were abducted in a bold raid in which gunmen invaded their house in an affluent Baghdad neighborhood and bundled them away without firing a shot. Their Iraqi guards had stopped reporting for work before the kidnapping, leaving the foreigners practically defenseless.

So far, insurgents in Iraq have kidnapped more than 150 foreigners, and nearly 30 of them have been killed. At least 21 reportedly are still being held, including two French journalists who disappeared Aug. 20. A group calling itself the Islamic Army in Iraq claimed to have abducted them.

Zarqawi, who has been identified by U.S. officials as an associate of Osama bin Laden, has personally carried out the beheadings of captives in his group's custody, according to claims posted on militant Muslim Web sites.

The videos typically show five or six masked men clad in black who stand behind the kneeling victim as one of them, believed to be Zarqawi, reads a written statement in a ritualized scene. The man then pulls a knife out of his belt, saws off the captive's head and holds it up for the camera.

The United States has offered a $25 million reward for information leading to the capture of Zarqawi, whose real name is Ahmed Fadhil Nazzar Khalaylah. The same amount has been offered for bin Laden.