The 44-year-old aid worker was seized in Syria in 2013. He was being held by Islamic State militants who have already killed two US captives.
The latest video also includes a threat to kill a second British hostage.
The PM vowed to do everything possible to find the killers. Mr Haines’s family said he would be “missed terribly” reported BBC.
Born in Holderness, East Yorkshire, Mr Haines went to school in Perth and had been living in Croatia. His parents live in Ayr.
‘Despicable and appalling’
In a statement released by the Foreign Office, Mike Haines said his brother, a father of two, “was and is loved by all his family”.
“David was most alive and enthusiastic in his humanitarian roles. His joy and anticipation for the work he went to do in Syria is for myself and family the most important element of this whole sad affair,” he said.
US President Barack Obama Saturday strongly condemned the beheading of a British hostage by the Islamic State (IS) militant group, vowing to work with Britain and the international community to destroy the terror group.
The IS released a video Saturday which showed the beheading of British aid worker David Haines, who was kidnapped last year in Syria, Xinhua reported.
A masked IS militant on the video claimed the execution was in retaliation for British Prime Minister David Cameron’s promise to join a US-led coalition to fight the IS.
“The United States strongly condemns the barbaric murder of UK citizen David Haines by the terrorist group ISIL. Our hearts go out to the family of Mr. Haines and to the people of the United Kingdom,” Obama said in a statement issued by the White House.
“The United States stands shoulder to shoulder tonight with our close friend and ally in grief and resolve. We will work with the United Kingdom and a broad coalition of nations from the region and around the world to bring the perpetrators of this outrageous act to justice, and to degrade and destroy this threat to the people of our countries, the region and the world,” Obama added.
The video was similar to those of the recent executions of two American journalists, James Foley and Steven Sotloff, which were also posted online.
At the end of the latest video, the masked IS militant, who appeared to be the same killer in the previous two videos, threatened to kill another British hostage named Alan Henning, if Cameron continued to support the fight against the IS.
Cameron earlier condemned the killing of Haines as “a despicable and appalling murder” and “an act of pure evil” by the IS. “We will do everything in our power to hunt down these murderers and ensure they face justice, however long it takes,” he vowed.