The apparent beheading of a Japanese hostage has steeled Tony Abbott's determination to keep up the fight against Islamic State extremists.
The group has released a video purportedly showing the beheading of Japanese journalist Kenji Goto.
Mr Abbott labelled the act as another atrocity by a death cult.
"If true, this will be a terrible shock for the people of Japan, an unspeakable horror for the family," he told reporters in Sydney on Sunday.
"This just demonstrates how important it is that all countries do what they reasonably can to disrupt and degrade this death cult, which has ushered in a new dark age over parts of the Middle East."
A visibly upset Japanese Prime Minister Shinzo Abe has vowed to never forgive terrorists.
"We will co-operate with the international community to make them atone for their crimes," he told reporters in Tokyo.
Australia is part of a US-led coalition supporting Iraqi efforts to eradicate the Islamic State terrorists.
The video makes no mention of another hostage, a Jordanian pilot that IS has threatened to kill.
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