Earlier on Saturday, the Ezzedine Al-Qassam Brigades released an 11-second clip showing captive Nadav Popplewell alive and identifying himself.
The Hostages and Missing Families Forum campaign group identified him in a statement.
In the video, the footage was superimposed with text in Arabic and Hebrew that read: "Time is running out. Your government is lying."
The hostage had a black eye in the clip but showed no other visible signs of injuries.
Wearing a white T-shirt and appearing to speak under duress, he introduced himself as 51-year-old Popplewell, from kibbutz Nirim in southern Israel.
Later on Saturday, Hamas released what appeared to be a full version of the video from which the earlier clip was taken.
Hamas claimed in the video that Popplewell had died on Saturday of his earlier wounds.
"Nadav Popplewell, a British citizen, died today after being seriously injured a month ago (due to Zionist air strikes)," a superimposed text in English said in the video below a picture of the hostage shown in a white photo frame.
"His health deteriorated because he did not receive intensive medical care because the enemy has destroyed the Gaza Strip's hospitals," Abu Obeida, the spokesman of the Ezzedine Al-Qassam Brigades, said in a separate statement.
AFP was unable to independently verify the authenticity of the video.
Israeli military spokesman Rear Admiral Daniel Hagari did not mention Popplewell during a televised briefing, but said that troops were still seeking to bring the hostages home.
"Even at this hour, every fighter (soldier) and commander on the battlefield envisions the hostages, sees them, thinks of them, and fights to bring them home," he said.
- 'Cry of distress' -
Popplewell was kidnapped from his home during Hamas's October 7 attack along with his mother, Hanna Peri, who was released during a one-week truce in November -- the only pause so far in more than seven months of war.
Popplewell's older brother was killed in the attack.
The video posted Saturday on the Telegram channel of Hamas's armed wing was the third time in less than a month that the group released footage of captives held in Gaza.
On April 27 Hamas released a video showing two hostages alive -- Keith Siegel and Omri Miran.
Three days earlier it broadcast another video showing hostage Hersh Goldberg-Polin alive.
The videos come amid growing domestic pressure on the Israeli government to secure the release of the hostages.
"Every sign of life received from the hostages held by Hamas is another cry of distress to the Israeli government and its leaders," the families forum said in a statement earlier on Saturday.
"We don't have a moment to spare! You must strive to implement a deal that will bring them all back today."
Hundreds of protesters meanwhile gathered in the commercial city of Tel Aviv and in Jerusalem calling to strike a deal for the release of the captives.
Hamas and Israel have so far failed to reach a deal despite repeated rounds of indirect negotiations.
Some 250 people were abducted to the Gaza Strip on October 7 when Hamas militants attacked southern Israel.
Israeli officials say 128 of them are still held captive in the Palestinian territory, including at least 36 who are dead.
The attack resulted in the deaths of more than 1,170 people, mostly civilians, according to an AFP tally based on official Israeli figures.
In Israel's retaliatory military campaign in Gaza, at least 34,971 people have been killed so far, most of them women and children, according to the Hamas-run territory's health ministry.
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