US President Barack Obama called Wednesday for an international front against jihadists in Iraq and Syria after they beheaded a second American reporter, as Britain and France weighed military action.

"We know that if we are joined by the international community, we can continue to shrink ISIL's sphere of influence, its effectiveness, its financing, its military capabilities," said Obama, referring to the Islamic State (IS).

"And the question is going to be making sure we've got the right strategy, but also making sure that we've got the international will to do it," he said in Estonia's capital Tallinn.

Britain, with one of its nationals also under threat of beheading, said it would not rule out taking part in air strikes if necessary.

"I can assure you that we will look at every possible option to protect this person," Foreign Secretary Philip Hammond said.

And French President Francois Hollande likewise raised the prospect of a military response to the threat posed by IS.

"The head of state underlined the importance of a political, humanitarian and if necessary military response in accordance with international law" to fight against IS, the presidency said.

Obama pledged that justice would be done to the killers of 31-year-old reporter Steven Sotloff, wherever they hid and however long it took.

IS on Tuesday posted video footage on the Internet of Sotloff's beheading, confirmed as authentic by Washington, sparking outrage around the world.

It said the journalist's killing, which comes on the heels of the beheading last month of another US reporter, James Foley, was in retaliation for expanded US air strikes against its fighters in Iraq during the past week.

It warned that a British hostage would be next unless London backs off from its support for Washington's air campaign.

Obama said Washington was determined to halt the IS threat but warned it would depend on close cooperation with partners in the region.

And the United Arab Emirates voiced its readiness to "take needed measures", as Iraq condemned the beheadings as "an act of savagery and evil" that showed the urgency of defeating the jihadists.

Hammond said British air strikes were now an option.

"We will look very carefully at the options available to us to support the legitimate government of Iraq and Kurdistan in defending themselves," the foreign minister said.

"If we judge that air strikes could be beneficial, could be the best way to do that, then we will certainly consider them but we have made no decision to do so at the moment."

A top US intelligence official, meanwhile, said IS jihadists in Iraq and Syria pose a genuine threat to the West but are "not invincible" as demonstrated by American air strikes.

And there is no "credible" evidence that IS fighters are plotting an imminent attack on the United States, said Matthew Olsen, director of the National Counter-Terrorism Center.

In violence on the ground on Wednesday, 10 children were among 16 people killed in an IS-controlled area of eastern Syria, a monitor said.

The Syrian Observatory for Human Rights said a regime air raid hit a bus, but state television blamed the jihadists.

- 'Despicable act' -

British Prime Minister David Cameron said the beheading video depicted an "absolutely disgusting, despicable act" and chaired a meeting of security chiefs to discuss how to tackle the IS threat.

The masked executioner in the video spoke with a London accent and claimed to be the same man, confirmed by UK security services as a Briton, who beheaded Foley.

"I'm back, Obama, and I'm back because of your arrogant foreign policy towards the Islamic State," the black-clad jihadist says, wielding a combat knife.

"So just as your missiles continue to strike the necks of our people, our knife will continue to strike the necks of your people," he declares, before reaching round to cut his captive's throat.

At the end of the five-minute recording, the militant threatens another captive, identified as Briton David Cawthorne Haines.

London has maintained a media silence about the kidnapping of the aid worker and there were few immediate details about when or how he was abducted.

Britain has so far only carried out reconnaissance flights in support of the US air campaign from its base in Cyprus.

- 'Brave and talented' -

In a statement, the Sotloff family, who live in Miami, said: "The family knows of this horrific tragedy and is grieving privately. There will be no public comment from the family during this difficult time."

Israeli media reported that the family was Jewish and that Sotloff himself held joint US-Israeli nationality but IS made no mention of either in its video.

Sotloff's former employers at Time and Foreign Policy paid tribute to a man widely respected for his intrepid reporting in Syria and the wider region, including a previous stint in Libya.

Hours after the posting of the video, the White House announced that Obama had authorised about 350 more US troops to beef up security at US diplomatic facilities and protect personnel in Baghdad.

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