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Canada confirms head dumped in a street in Jolo was that of John Ridsdel, who was snatched by Abu Sayyaf last September.

The severed head of a Canadian hostage has been found on the streets of Samal Island in the Philippines.

Justin Trudeau, Canada's prime minister, confirmed that a plastic bag containing a decapitated head and dumped in a street on Monday night by two men on a motorcycle in Jolo, a town in Sulu province of the Philippines, was that of John Ridsdel.

Ridsdel, 68, was kidnapped along with three other tourists - fellow Canadian Robert Hall, a Norwegian man and a Filipino woman - last September by the Abu Sayyaf armed group from a marina on Samal Island, also known as Islam Garden.

Abu Sayyaf had earlier threatened to kill one of the three male hostages if a large ransom was not paid by 3pm Monday local time.

Abu Sayyaf, which is considered a terrorist organisation by Canada and other Western countries, emerged in the early 1990s as an offshoot of a separatist rebellion by minority Moro Muslims in the predominantly Roman Catholic nation's south.

In videos posted online, Ridsdel and fellow Canadian Robert Hall, Filipino Marites Flor and Norwegian Kjartan Sekkingstad were shown in a sitting position with no shirts while fighters stood behind them and one of them held a long knife to Ridsdel's neck.

In the video released by Abu Sayyaf, Ridsdel asked Trudeau, the Canadian people and the world to do what was needed to meet the demands of his abductors, saying that otherwise he and the other hostages would be killed.

"To my family and this is so much bigger, to the Canadian prime minister, Canadian people and the world, please do what is needed to meet their demands within one month or they will kill me and they will execute us," Ridsdel said.

In his remarks, Trudeau expressed outrage over Ridsdel's killing.

"Canada condemns without reservation the brutality of the hostage takers and this unnecessary death," Trudeau said from a cabinet retreat in Kananaskis, Alberta.

"This was an act of cold-blooded murder and responsibility rests squarely with the terrorist group who took him hostage."

Canada is committed to working with the government of Philippines and international partners to pursue those responsible for "this heinous act" and bring them to justice, he said.

But he said Canada would not comment further or release any information that may compromise ongoing efforts or endanger the safety of the remaining hostages.

"On behalf of the Government of Canada and all Canadians I would like to express my deepest condolences to the family and friends of Mr Ridsdel," Trudeau said.

Earlier this month, Abu Sayyaf freed a former Italian priest after six months of captivity in Sulu.

Philippine troops and police found Rolando del Torchio on a ferry at Jolo port, and took him to a military clinic for an examination because of his poor health, a military report said.

A Philippine news site reported that del Torchio was released after a ransom was paid. Another site reported $630,000 was paid.

In Rome, the Italian foreign ministry thanked the Philippine government for its "excellent cooperation and commitment, which allowed the release".

The abductions highlight the long and ongoing security problems in the southern Philippines, a resource-rich region that is gripped by poverty, lawlessness and decades-long Muslim and communist insurgencies.