A Muslim intermediary trying to win the release of Norman Kember, an elderly British hostage in Iraq, said today that there was still hope for his release despite the emergence today of a videotape apparently showing the execution of a US hostage.

A Sunni Arab extremist group close to al-Qaeda posted a videotape on the internet this morning which it said showed the execution of Ronald Schulz, an engineer from Alaska who, the recording claims, was a security consultant for the Iraqi Ministry of Housing.

The footage showed a blindfolded and handcuffed man on his knees being shot by a machine gun from behind.

Although the victim appeared to have blond hair like Mr Schulz, the film did not show the victim's face and it was impossible to idenfity him conclusively.

"As we promised, we broadcast a videotape of the killing of the American adviser," said a statement accompanying the videotape posted by the Islamic Army in Iraq.

The same group claimed the killing of Enzo Baldoni, an Italian journalist, in August 2004 and the kidnapping of French journalists Christian Chesnot and Georges Malbrunot, who were released in December 2004 after four months in captivity.

But Anas Altikriti, an envoy for the Muslim Association of Britain who travelled to Iraq in the hope of securing Mr Kember’s release, said the killing was unlikely to affect the situation of Norman Kember, a 74-year-old Briton abducted in Baghdad along with three others in a separate hostage-taking incident on November 26.

Mr Altikriti said that very few people in Iraq had doubted there would be a "tragic end" to Mr Schulz’s story. "The prospects were grim from the word go. In the eyes of the abductors, he was serving the occupiers," Mr Altikriti said. "As tragic as the killing is, the reality is that the news did not come as much of a surprise to anybody."

Mr Altikriti said the case of German archaeologist Susan Osthoff bore more similarities to that of Mr Kember and offered hope. He said that he was "uplifted" to hear yesterday that Mrs Osthoff had been released unharmed.

"There’s a lot of hope. Anything is possible," he added.

News of Mr Kember’s fate is likely to emerge in a matter of "days rather than weeks" now that the dust is settling after elections in Iraq, according to Mr Altikriti, who said: "I believe that he’s still alive. I’m extremely hopeful that the hundreds of messages we sent through various channels will resonate. We are still working very hard on this."

Mr Kember, from Pinner, north west London, was seized in Baghdad with James Loney, 41, and Harmeet Singh Sooden, 32, both Canadians, and an American, Tom Fox, 54. He had travelled to Iraq as a gesture of solidarity with the Christian Peacemaker Team, a Canadian-based international peace group.

The Swords of Righteousness Brigade, which is holding him, has demanded the release of Iraqi prisoners.

Voices from across the Muslim world have called for the hostages to be freed, with an appeal even being made by Britain’s highest-profile terror suspect, Abu Qatada, from his maximum security prison cell.

Jack Straw has appealed for the kidnappers to get in touch, but the Foreign Office says that so far there has been no contact and there has been no news of the hostages since a video released 12 days ago, before a deadline for their execution.

In today's video, the extremist group showed a picture of Mr Schulz alive on a split screen as it aired the killing. The group had aired the same footage of Mr Schulz when he was first taken hostage earlier this month.

A statement on the website said that the "arrogance" of President Bush "was a major reason for his killing".

The US State Department has said it could not confirm whether Mr Schulz had been killed.

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