The Foreign Office is investigating reports that a top al-Qaeda member has admitted he is one of the gang that abducted and beheaded Ken Bigley.
Ken Bigley was held captive by Iraqi militants
Syrian Loai al-Saqa, 33, in custody in Turkey, added he had presided over Bigley's mock trial, the Guardian says.
He denies financing suicide bombings with money from al-Qaeda Iraq leader Abu Musab al-Zarqawi, it is reported.
The Tawhid and Jihad Iraqi militant group killed Mr Bigley, 62, of Walton, Liverpool, in Iraq on 8 October 2004.
Mr Saqa's lawyers are reportedly convinced he is telling the truth about Mr Bigley.
Lawyer Osman Karahan added: "My client has been a warrior for Islam for the past 10 years."
Mr Saqa also reportedly says he met Osama Bin Laden in Afghanistan, provided false passports for some of the 11 September attackers, and fought with rebels in Fallujah.
And Jordanian authorities suspect he was involved in a plot to bomb hotels and tourist sites around Amman on New Year's Eve 1999, the Guardian says.
But Mr Saqa denies having any role in the November 2003 Istanbul bombings, which killed 61 people and injured more than 600 at four targets including the British consulate general and the HSBC bank headquarters, the Guardian says.
A Foreign Office spokesman told BBC News it was "following up" reports of Mr Saqa's admission of involvement in Mr Bigley's abduction and murder.
Ken Bigley was murdered by members of Tawhid and Jihad
"We have pursued every possible lead," he added.
"We have continued to do all we can to establish the full circumstances of his death and to bring those responsible to justice.
"We urge anyone who has any information about the murder of British nationals in Iraq to contact the appropriate authorities and to contact us so that we can keep family members informed."
Mr Bigley's brother, Phil, told the Guardian: "Anything that would help with the closure of this matter would be welcome."
Mr Bigley had been working on an engineering project when he was kidnapped along with two Americans.
The Foreign Office has said it is working closely with authorities in Iraq to try to find his body. DNA tests have failed to find a match.
US and Iraqi authorities are also actively trying to track down his killers.