The kidnappers of Perth man Warren Rodwell have posted another photograph of their hostage on the internet and issued a stark threat to his life.
And for the first time evidence has emerged that Mr Rodwell may have been taken by a radical group with ties to al Qaeda.
Mr Rodwell was snatched at gunpoint from his home in the southern Philippines in December 2011.
His Philippine wife has been issued a ransom demand for $2 million.
Foreign Affairs Minister Bob Carr told the ABC a new video has been released.
"We continue to work with the government of the Philippines about securing his safe handing over," he said.
Mr Carr said had spoken to Mr Rodwell's sister, who is in contact with Australian Federal Police in the Philippines.
He was reluctant to say more, given the fragile situation.
Yesterday Philippine news websites posted a picture of Mr Rodwell surrounded by masked fighters armed with machineguns.
The local news blogs reported that the photo was posted with a message on Facebook warning:
"We will give you a chance to save his life before it's too late."
The picture shows Mr Rodwell holding a recent copy of local newspaper the Philippine Daily Inquirer to prove the image was taken recently.
The news blogs claimed the kidnappers were members of Abu Sayyaf - a radical militant group battling the Philippine Government.
It is the first time the kidnappers have shown themselves in a picture alongside Mr Rodwell.
On Boxing Day last year Mr Rodwell's kidnappers posted a video on YouTube where the former soldier said he believed he had no hope of being released.
In the most recent picture Mr Rodwell appears to have lost a great deal of weight.
Mr Rodwell, 53, has three adult children in Perth and he has relatives living in Kalgoorlie and in the eastern states.
He owned property in Shoalwater and Rockingham until 2002 and it is believed he worked as a financial counsellor for the Rockingham-Kwinana Red Cross in 1990.
He has since travelled the world extensively through Asia, sometimes working as an English teacher.
The Federal Government has ruled out paying a ransom but says it is doing all it can to get him released.
Abu Sayyaf has been linked to a string of kidnappings and assassinations through the Southern Philippines.
Though Abu Sayyaf started life as a radical group intent on establishing Islamic law in parts of the Philippines, the organisation has fragmented and many members have turned to crime such as kidnapping to fund their activities.
A number of Europeans and a Japanese man are also thought to be currently held by Abu Sayyaf gunmen.