"Linda Norgrove was travelling north of Jalalabad up to Kunar province where she was to open a charity project, when she was taken hostage," Al Jazeera's Sue Turton reported from Afghanistan.
"The Taliban group who took her initially asked for a prisoner exchange for a Pakistani neuroscientist who had recently been jailed in New York for 86 years for attempting to kill US soldiers and agents," our correspondent said on Saturday.
Norgrove, 36, had been held hostage in eastern Afghanistan since September 26 after being kidnapped with three of her Afghan colleagues in southern Kunar province.
William Hague, the British foreign secretary, released a statement saying: "It is with deep sadness that I must confirm that Linda Norgrove, the British aid worker, was killed at the hands of her captors in the course of a rescue attempt last night."
But our correspondent said the details of her death are not clear.
"Coalition forces discovered where she was being kept. Last night, they attempted to free her. The British foreign secretary said that her captors killed her. But Afghan sources are saying it's not yet clear whether she was killed by the Taliban or killed in the crossfire," Turton said.
In another development on Saturday, four Italian Nato soldiers died and another was wounded after a roadside bomb planted by suspected anti-government fighters blew up their vehicle in southwestern Afghanistan, officials say.
The blast occurred as the troops returned from a security operation in the Gulistan valley in Farah province.
The soldiers were escorting a convoy of 70 civilian lorries when a powerful home-made bomb exploded, the Italian news agency Ansa reported.
General Massimo Fogari, the head of the press service at the defence chief of staff, said, "After the blast, the convoy came under fire until the attackers were forced to flee."
He said that it was a Taliban-style attack.
The deaths brought the number of Nato forces killed this month to 24. At least 2,012 foreign service members have died since the US-led invasion in 2001 that removed the Taliban from power, according to a count by the Associated Press news agency.
The attack on the foreign troops came a day after Mohammad Omar, the governor of Kunduz province who was a vocal critic of the Taliban and had been the target of several previous attacks, was killed along with more than a dozen other people in a bomb blast at a mosque.
The blast occurred during Friday prayers at the Shirkat mosque in Taluqan, the main city of Takhar province, where Omar had reportedly travelled to because of security concerns in Kunduz.
Source:Al Jazeera and agencies