British aid worker Linda Norgrove may have been killed by a grenade thrown by US troops trying to rescue her from Taliban kidnappers in Afghanistan, the Prime Minister has said.
Mr Cameron has announced that a full US/UK investigation is being launched into the circumstances surrounding the 36-year-old's death on Friday.
It had initially been reported that Ms Norgrove died after her rebel captors detonated a bomb vest as American troops attempted to rescue her.
Originally from Sutherland in the Scottish Highlands, Ms Norgrove was seized by militants in Kunar province on September 26.
Three Afghan nationals also taken by the insurgents were later released, but Ms Norgrove continued to be held amid growing concern.
Speaking at a press conference at 10 Downing Street, Mr Cameron said it was not yet certain that Ms Norgrove's death was caused by allied forces.
US commander General David Petraeus informed Downing Street on Monday morning that a review of the rescue operation had uncovered new information suggesting that a grenade detonated by taskforce members may have been to blame.
Mr Cameron informed Ms Norgrove's family of the "deeply distressing development" before making his announcement at a scheduled press conference which was delayed by almost an hour.
He said the decision to mount a rescue operation was made by Foreign Secretary William Hague "after careful consideration" and had his full support as Prime Minister.
Ms Norgrove's life was in "grave danger" from the moment she was seized, and there were fears that she might be passed up the terrorist chain and put at greater peril if she was not rescued.
"I am clear that the best chance of saving Linda's life was to go ahead, recognising that any operation was fraught with risk for all those involved and success was by no means guaranteed," said Mr Cameron.