Chris McManus – from north-west England – and Franco Lamolinara were “murdered by their captors before they could be rescued”.
Islamist extremist gunmen seized the two engineers in Birnin Kebbi city in the north-west of Nigeria on May 12 last year.
Both had been working on construction of the state headquarters for the Central Bank of Nigeria by Italian contractor B Stabilini.
Prime Minister David Cameron said authorities had decided to go ahead with the rescue operation after receiving “credible information about [the men’s] location”.
He said: “A window of opportunity arose to secure their release. We also had reason to believe that their lives were under imminent and growing danger.”
Cameron said it was “with great regret” that he had to announce that McManus and Lamolinara had lost their lives in the subsequent operation.