Islamic State militants in Iraq and Syria are currently holding a British man hostage and threatened to kill him in a video this week which showed a US journalist being killed, the second in as many weeks.

Amid reports that hostages from France and Italy have been released following the payment of large sums, Cameron confirmed Britain's policy not to pay ransoms and took a swipe at those who do.

"It is utterly self-defeating. It is worse than self-defeating, it is actually a risk to us back at home," Cameron said ahead of the NATO summit dinner on Thursday night.

He used the leaders' dinner at Cardiff Castle to challenge allies who signed up to a G8 commitment last year on ransoms to honour their pledge.

"All those people who signed these declarations know that what matters is not your signature on a declaration but not letting money be paid to terrorist kidnappers because that money goes into arms, it goes into weapons, it goes into terror plots, it goes into more kidnaps," he said.

Earlier, Cameron confirmed that Britain had tried to rescue the British hostage but was unsuccessful.

"If we have that policy, we should also make sure we do everything we can to help British people when they are taken hostage," Cameron said.

"Since becoming Prime Minister, I have ordered a number of hostage rescues in different parts of the world, and there was a hostage rescue attempt in this case as well -- sadly not successful."

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