The family of an Australian engineer being held hostage in Iraq today offered to make a generous donation to an Iraqi charity to secure his freedom.

Militants who seized Douglas Wood, 63, an Australian citizen who lives in California, released a videotape on Friday demanding that Australia start pulling its troops out of Iraq within 72 hours, although they didn’t say what would happen if the demand was not met.

Reading from a statement at Australia’s Parliament House, Mr Wood’s younger brother Malcolm said that the family empathised with the struggles of people living in strife-torn Iraq.

"To this end, out of a sense of moral obligation and solidarity, the family of Douglas Wood will be making a generous charitable donation to help the people of Iraq," he said.

"This is not a ransom; there has been no demand for a ransom. We would hope to make a significant gesture to help secure Douglas’s release."

Malcolm Wood said that the donation offer was being sent with Australia’s most senior Muslim cleric, who left for Baghdad today in a last-ditch attempt to save Mr Wood’s life. He gave no details of where the donation would go.

Sheik Taj El Din al-Hilali, Australia’s mufti since 1989, has urged the militants to release their hostage, saying on the Arab television network al-Jazeera that most Australians do not support their Government’s troop deployment there.

Sheikh al-Hilali offered to mediate personally in the crisis. It was not immediately clear when the 72-hour deadline expired or whether it was extended.

"We have to take any opportunity that might present itself to secure the release of Mr Wood," Keysar Trad, the cleric’s spokesman, said today.

The Egyptian-born Sunni cleric flew to Iraq accompanied by Amir Ali, the Pakistani-born president of the Australian Federation of Islamic Councils, and an Australian guide with tribal contacts, said Mr Trad.

The mufti has had a hostile relationship with Australia’s centre-right government, which has been a staunch ally in the US-led War on Terror and contributed 2,000 troops to the Iraq invasion.

The Government has accused Sheikh al-Hilali of describing the September 11 attacks on the United States as "God’s work" and of voicing support for Palestinian suicide bombers. Sheikh al-Hilali says that his words were misinterpreted.

Malcolm Wood said that his brother, who has a serious heart condition, had not received his medication since his abduction more than a week ago, unless he had some medication on him when he was kidnapped.

Alexander Downer, the Australian Foreign Minister, promised that his Government would help the cleric’s visit if it could. "He is on his way and we wish him well and obviously would do anything to facilitate his visit," Mr Downer told Sydney radio station 2UE. He said that Australian government staff were working "day and night" to free Mr Wood.

On Saturday, the mufti sat next to the hostage’s brothers Malcolm and Vernon Wood and videotaped a statement in Arabic saying that he regarded Douglas Wood as his brother, a fellow Australian and an innocent man.

"We value your jihad and your efforts," the cleric told the kidnappers in his plea, broadcast by Qatar-based al-Jazeera. "We call upon you to do something for the sake of our community and all Australian society, which does not support (Prime Minister John) Howard’s pro-American policies."

"We implore you to release him in the name of God, for the sake of the Islamic community in Australia ... and for the sake of the family of Douglas Wood."

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