"We are appalled and profoundly saddened by the cold-blooded murder of Kenneth Bigley after a protracted period of mental torture and anguish," said the council on Friday.
"We offer our heartfelt sympathy and condolences to the family who have gone through the most dreadful experiences," it said.
Its general-secretary Iqbal Sacranie added: "There is absolutely no justification for the killing of this defenceless individual. This is a deed which is deeply repugnant and utterly reprehensible."
"We unequivocally condemn it and hope his murderers are brought to justice quickly," he said, adding that Bigley's reported death was "completely and utterly rejected" by the vast majority of the Muslim community in Britain.
The council sent two envoys to Iraq last month to meet Islamic clerics and community leaders to help secure the release of Bigley, 62, an engineer seized on 16 September along with two Americans also working at a US military base who were previously executed.