BAGHDAD (AFP) - – A Shiite Islamist group on Saturday said it has kidnapped an American military contractor in Iraq and warned of attacks, hours after an Internet video showed the captive man wearing US military uniform.

The League of the Righteous told AFP they had abducted Issa T. Salomi in response to the Iraqi government's failure to release its members from US-run jails and because of fresh arrests.

An official from the group said Salomi was a US citizen of Iraqi origin whom the Pentagon announced earlier had gone missing in Baghdad on January 23.

"This is a direct response to the arrests of leaders of our group two weeks ago," said the official on condition of anonymity.

"The agreement with the government and the League of the Righteous was suspended because the government cannot obtain the liberation of our people held in American prisons.

"We will resume attacks against the occupiers and this abduction is the first of our actions."

Salomi's was the first high-profile kidnapping of a foreigner in Iraq since the same group kidnapped British IT expert Peter Moore and his four bodyguards, also Britons, in Baghdad almost three years ago.

The group entered into a reconciliation process with the Iraqi government in April 2009, but last month it said it was considering halting the talks.

In the video, which runs less than two minutes, Salomi reads out the group's demands for the release of detainees who had "resisted occupation" and "never been involved in any serious crime against their fellow innocent Iraqis."

The video surfaced shortly after the US defence department said civilian employee Salomi, 60, of El Cajon, California, had been missing for the past two weeks and a search launched to find him.

Salomi, pictured against a black flag bearing the militant group's name, also called for the conviction of employees of US security firm Blackwater, since renamed Xe Services, accused of killing unarmed Iraqi citizens in 2007.

"The second demand is to bring the proper justice and the proper punishment to those members of the Blackwater company that have committed unjustifiable crimes against innocent Iraqi citizens," he said in the video.

"I also would like to relay the justifiable demand of the Iraqi Islamic resistance for the complete withdrawal from Iraq, so Iraq can become a sovereign nation."

Salomi, who spoke in English but without an American accent, said he was in good health.

"I would like to express to all the members of my family, especially my wife, my children and my friends and to assure everybody that I'm being treated kindly and I'm in good health," said the man.

Salomi's wife, Muna, 52, told the Washington Post that the man pictured in the video was her husband and she was distraught at the news. "I'm very sick. I cannot talk," she said.

AFP could not reach her for comment at her California home.

US Vice President Joe Biden announced during a visit to Baghdad in January that Washington will appeal a judge's decision to clear five US security guards accused of killing 14 unarmed Iraqis in 2007 while working for Blackwater.

The guards, who had been part of a convoy of armoured vehicles, had been charged with killing the civilians and wounding 18 others in an attack using guns and grenades at a busy Baghdad square.

The League of the Righteous released British computer expert Moore unharmed in December after 31 months in captivity during which all four of his British bodyguards abducted with him are thought to have been killed.

The group said last March that a deal was in place to release the Britons in exchange for prisoners being held by US forces in Iraq.

The following month, Iraq's Committee for National Reconciliation, established by Prime Minister Nuri al-Maliki four years ago, said it was holding talks with the militants.

And in June, the group's leader Laith al-Khazaali was freed from a US prison, around the same time the bodies of two of Moore's bodyguards were handed over to Britain.

Around 200 other detainees were freed in September, when a third bodyguard's body was transferred.

Negotiations over the British hostages were handled by Khazaali's brother, Sheikh Qais al-Khazaali, who was released on January 5, 2010.