The move came at the request of Kenneth Bigley's Liverpool-based family, who want to exhaust all means possible to save him from a group led by alleged al-Qaida ally Abu Musab al-Zarqawi.
"A family man called Ken Bigley is being held somewhere in your community," said the leaflet in Arabic. "Ken's mother, brothers, wife and child love him dearly. We are appealing for your help."
An Iraqi company went round Baghdad on Thursday handing out the leaflet, which had numbers for the British Embassy and local police, officials at the Foreign Office in London said.
No deadline set
"We appeal to those who have taken him to please return him safely to us. Do you know where he is?" the leaflet added.
The captors are threatening to kill Bigley unless women prisoners are freed, but have set no deadline.
Blair's stand is that negotiations
will encourage more seizures
Brother Paul Bigley said he believed the 62-year-old engineer had the strength to survive the ordeal after his two US fellow captives were beheaded.
"I think he has the
tenacity and resilience to last on this one," Paul Bigley told Reuters.
Prime Minister Tony Blair, to whom Bigley appealed in a videotape, has kept quiet for fear of inflaming the crisis.
That stance has contrasted with French President Jacques Chirac's public appeals for the release of two French journalists being held hostage.
Blair was at his Chequers country residence on Friday, preparing a speech to next week's conference of his ruling Labour Party, sure to be dominated by Iraq.
Since supporting the US-led invasion in March 2003, Blair's popularity has plummeted.
The Bigley crisis has come just at a time when he believed he had turned a corner and could re-focus the Britishpeople on domestic issues in advance of an expected election next May.
Critics said the Bigley kidnapping was a logical product of Blair's pro-Bush foreign policy.
"Many of us said that if you remove a dictator by force, you will have ... a vacuum into which the absolute extremists and the fundamentalists will stream and will then cause the sort of problem that we are witnessing," said Terry Waite, a former British hostage in Beirut.
American Michael Berg, whose son Nick was beheaded in Iraq in May, said on BBC Radio the abductions and killings were "horrible, immoral".
"But I think it's equally immoral for your prime minister Mr Blair to stand there and say that there's nothing he can do about it ... when in fact there is," he added.
"He certainly can't control George Bush but he can withdraw British troops from Iraq ... The first step in stopping the killing is for the West to get out of the Middle East."
Ex-hostage Terry Waite (L) said
the war has created a vacuum
With the captors giving Blair one of the most painful moments of his seven-year as prime minister, speculation mounted that they may string the saga out into the Labour conference or even kill Bigley then for maximum political impact.
Bigley's relatives have accused the government of not doing enough to save him, but now seem to have accepted Whitehall's line that it cannot negotiate for fear of encouraging captive-taking.