Japan and ISIS have agreed on an exchange of journalist Kenji Goto, held hostage by the Islamist militants, for Sajida al-Rishawi, the Iraqi woman who killed 60 people in a 2005 Jordan bombing, a senior Japanese diplomat said.

UPDATE: ISIS threatens to execute Jordanian hostage unless Iraqi prisoner released by Thursday sunset

Japanese Deputy Foreign Minister Yasuhide Nakayama added that “good news” is to come soon on the situation.

The country's prime minister, Shinzo Abe, called the abduction "an utterly despicable act."

"I have instructed all ministers to work together for the early release of Mr. Kenji Goto," Abe told journalists on Wednesday, AFP reported.

A Jordanian government spokesman has also said that Amman is prepared to free would-be suicide bomber Sajida Rishawi if its pilot is freed in return. However, the deal did not appear to progress throughout the day.

Jordanian FM @NasserJudeh: we've asked #ISIS for proof of pilot Kasasbeh's well-being and received none. Terrorist Rishawi still in jail. — Elhanan Miller (@ElhananMiller) January 28, 2015

Al-Kasasbeh, a first lieutenant in the Jordanian Air Force, was captured by the Islamic State in late December as his plane came down during an air raid by the US-led coalition.

Goto, a freelance video journalist, went missing in Syria in October 2014. He went there to try and rescue another Japanese hostage, Haruna Yukawa.

Yukawa was beheaded by Islamic State militants last week, and a picture of Goto holding a photo of his countryman’s head was then released.

On Tuesday, a video uploaded to the web by the jihadist group was comprised of an audio message by Kenji Goto, and a picture of Goto, dressed in an orange jumpsuit, holding a portrait of a Jordanian military pilot, Muadh al-Kasasbeh.

On the same day, Goto's mother, Junko Ishido, made a public plea to save his life.

“I can’t think of anyone besides Prime Minister Shinzo Abe who can negotiate with Jordan. As a mother, I sincerely hope that Kenji can once again set foot on Japan,” Ishido said.

Initially, IS was demanding $200 million for Goto’s release, but then decided to swap him for Al-Rishawi.