PM reaches out to Abe over IS threat

Prime Minister Tony Abbott has reached out to Japan's prime minister Shinzo Abe to offer solidarity after Islamic State demanded ransom to spare two Japanese hostages.

Mr Abbott spoke with Mr Abe on Thursday afternoon, assuring the Japanese prime minister he has the support of Australia as he deals with IS's threat to murder two hostages.

IS has released video footage in which it pledges to kill the two Japanese citizens if Tokyo doesn't pay the terrorist group $US200 million within 72 hours.

A militant says the demand is to compensate for Mr Abe's pledge of aid money for countries affected by IS violence.

Mr Abbott has condemned the most recent video.

"Australia stands with Japan as it faces this horrifying situation and calls on the captors to release these men and all other hostages," Mr Abbott said in a statement.

"Australia and Japan will never sacrifice our values and our freedom in the face of terrorism."