Plans to free two Western hostages were well under way when they were killed during a failed rescue bid in Nigeria, a spokesman for the kidnappers told Mauritanian news agency ANI.

The spokesman for a splinter cell of radical Islamist sect Boko Haram claims his group was negotiating the release of the British and Italian hostages and had reached an agreement with their families that excluded government involvement.

However, a senior government source in London yesterday denied there was any such plan, saying the rescue operation had been the best option.

“The kidnappers had established contact with the family of the British hostage and had begun negotiations asking for a €5 million ransom and the freedom of certain prisoners,” the Islamist spokesman said on Saturday.

The online news agency ANI often publishes reliable information on radical Islamist groups in west Africa. In December, it released a video in which gunmen threatened to kill one of the hostages if their demands were not met.

The spokesman added that the family of the Italian hostage had entered the negotiations in which both families had been provided with evidence that the hostages were still alive. He said the kidnappers had “proved their flexibility: They accepted to add the Italian to the agreement without supplementary demands and gave up their demand that detained Islamists in the region be freed”.

He said the parties had finally agreed on a ransom of €1.2 million, and no government intervention. “A tiny part of this ransom had already been paid a few days earlier and the rest was to come,” he added.

Italian engineer Franco Lamolinara, 48, and his British colleague Chris McManus, 28, were killed during the failed rescue bid authorised by British PM David Cameron on Thursday.

Boko Haram, blamed for scores of deadly attacks in recent months, has denied responsibility for the abductions.