Roh Moo-hyun expressed his anger and shock on Wednesday at the gruesome nature of 33-year-old Kim Sun-il's death but said it would not lead to the 670 Korean troops already in Iraq being withdrawn.
"I still feel heartbroken to remember that the deceased was desperately pleading for his life," Roh said in a brief televised address to the nation.
"We strongly denounce such an act of terror and are firmly determined to cope with it in conjunction with the international community."
Roh has argued the troop decision was a tough but crucial step to support the United States, an ally with 37,500 troops based in South Korea.
There had been vocal opposition to the deployment long before the kidnapping, with some planning to push ahead with a rally at about 04:00 GMT to protest against the new deployment.
Some members of parliament plan to put forward a resolution as early as Wednesday to overturn the deployment plan.
"I still feel heartbroken to remember that the deceased was desperately pleading
for his life"
South Korean president
But they are unlikely to succeed because most of the ruling party, which has a majority in the chamber since an April general election, and the conservative opposition support the deployment.
However, the National Security Council that advises Roh said it would boost safety measures to prevent similar incidents and seek the early withdrawal of non-essential South Korean civilians.
The government has already said about 30 businessmen will leave.
Kim had been in Iraq for about a year working as an Arabic translator for a small trading firm that supplies goods to the US military.
The government said US troops found Kim's body five days after he was seized in Falluja, west of Baghdad.