David Cameron's statement in full:
"The effort to free Chris McManus from the north west of England, and an Italian hostage was launched by Nigerian forces with the assistance of the UK.
"Chris McManus, a British citizen, was taken hostage by terrorists in Northern Nigeria in May 2011. He was taken hostage with his colleague, an Italian national, Franco Lamolinara.
"Since then, we have been working closely with the Nigerian authorities to try to find Chris and Franco, and to secure their release.
"The terrorists holding the two hostages made very clear threats to take their lives, including in a video that was posted on the internet.
"After months of not knowing where they were being held, we received credible information about their location.
"A window of opportunity arose to secure their release.
"We also had reason to believe that their lives were under imminent and growing danger.
"Preparations were made to mount an operation to attempt to rescue Chris and Franco. Together with the Nigerian Government, today I authorised it to go ahead, with UK support.
"It is with great regret that I have to say that both Chris and Franco have lost their lives.
"We are still awaiting confirmation of the details, but the early indications are clear that both men were murdered by their captors, before they could be rescued.
"Our immediate thoughts must be with Chris and Franco's families, and we offer them our sincerest condolences.
"Both families have endured a terrible ordeal, and this is a devastating moment for all of them.
"The Foreign Office have been in regular contact with the McManus family since Chris's capture. I spoke to them just before Christmas and I have spoken to them again with the news this afternoon.
"I want to take this opportunity to thank the Nigerian authorities, and President Jonathan personally, for all they have done to help find Chris, and combat terrorism.
"I also want to pay tribute to all those, including UK personnel, who worked so hard to try to bring Chris home safely. I am very sorry that this ended so tragically.
"I ask that the media respect the family's privacy and allow them time to come to terms with their loss.
"Terrorism and appalling crimes such as these are a scourge on our world. No-one should be in any doubt about our determination to fight and to defeat them."