We won't be intimidated by murders: Hockey

Joe Hockey has declared Australia will not be intimidated by the threats of murderers after the shocking beheading of another journalist by Islamic State (IS) extremists.

The Islamic insurgents have released a video showing a masked militant apparently beheading American Steven Sotloff - just weeks after the killing of fellow journalist James Foley.

The video is entitled `A second message to America', and includes warnings to the United States and its allies to stop military operations against IS in northern Iraq.

But Mr Hockey said Australia was "absolutely determined to do what is right by humanity - to do what is right by our values as Australians".

"We will never be intimidated as a nation or a people by the threats of murderers," the federal treasurer told ABC Radio today.

Prime Minister Tony Abbott has labelled IS a "death cult", comparing its actions to the atrocities of the Nazis and communists.

Meanwhile the RAAF has begun airlifts of weapons to Kurdish forces fighting Islamic extremists in the north of Iraq after being involved in humanitarian airdrops.