Britain's Foreign Secretary Philip Hammond (pictured) said on Sunday that the killing of US journalist James Foley by a man speaking with an English accent was an "utter betrayal of our country".
Hammond's comments came amid growing concern in London that British passport holders who travel to fight in Iraq and Syria could return to commit attacks on British soil.
The Islamic State jihadist group posted a video of Foley's killing online on Tuesday.
In it, a masked militant with a London accent executed the journalist, who had been missing since his capture in Syria in 2012.
The Sunday Times newspaper, citing unnamed senior government sources, reported that intelligence services MI5 and MI6 have identified the fighter suspected of killing Foley but the sources did not divulge the suspect's name.
"It is horrifying to think that the perpetrator of this heinous act could have been brought up in Britain," Hammond wrote in an article published in this week's Sunday Times.
"It is an utter betrayal of our country, our values and everything the British people stand for."
Hammond also warned that IS was "turning a swathe of Iraq and Syria into a terrorist state as a base for launching attacks on the West."
He added: "Unless they are stopped, sooner or later they will seek to strike us on British soil."
Britain has ruled out sending ground troops into Iraq to fight the jihadists. But it is taking steps including sending equipment to Kurdish peshmerga fighters to help combat them, as well as offering humanitarian assistance.
Kidnapped German released in Syria
A 27-year-old German kidnapped in Syria by militants from the Islamic State around a year ago has been released, according to the Sunday newspaper Welt am Sonntag.
Quoting "investigating sources", the newspaper said that a "substantial consideration" was made to secure his release.
The newspaper quoted the foreign ministry as insisting that no ransom was paid for the man's release.
Contacted by AFP, the foreign ministry refused to make any comment on the report.
The man, whose name has not been released, is from the eastern state of Brandenburg and had travelled to Syria in June 2013 with the intention of offering "humanitarian aid".
His family reported him missing when he failed to contact them, the newspaper said.
Then earlier this year, the man's family received a video containing a ransom demand and also showing the execution of another hostage, the newspaper said.
The German authorities - including the federal police BKA, the BND intelligence services and the foreign ministry - subsequently entered into negotiations with the kidnappers.