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imageBAGHDAD: US President Barack Obama called on Wednesday for an international front against militants 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.

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 militants 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 Centre.

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

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

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