There has been no word on Mr Bigley since a video last week

In a BBC interview, Mr Allawi said certain areas were "quite good" and that the situation was "dynamic".

Mr Bigley, 62, of Liverpool, was taken hostage in Iraq on 16 September by the Tawhid and Jihad group along with two Americans who have since been beheaded.

On Thursday, Sinn Fein leader Gerry Adams made a second plea on al-Jazeera television for Mr Bigley's release.

"I appeal for his release on the grounds that he is an Irish citizen," he said.

Irish connection

On Tuesday Mr Bigley was granted a passport by Ireland after his family appealed to the neutral country for help.

Mr Bigley can claim Irish ancestry through his Dublin-born mother.

His family hopes that by stressing his Irish connections, his kidnappers will be persuaded to release him.

Mr Allawi said the Iraqi government was "trying very hard" to resolve Mr Bigley's case.

He added: "We don't know if it will produce a good result."

He did not specify what the movement in the case might be and said he could not comment on whether a ransom was being negotiated.

Libya appeal

A Foreign Office spokeswoman said she could not comment on Mr Allawi's remarks.

"Obviously we are talking to Mr Bigley's family. We are giving them all the support we can and we are doing everything we can," she said.

The comments follow an appeal on Wednesday from Libya's Gaddafi family for Mr Bigley to be released from his kidnap ordeal.

Mr Bigley's brother Paul has also said he heard his brother had been handed over to a group who were preparing to make a ransom demand.