Within hours of Linda Norgrove's Toyota Corolla being forced off the road in Afghanistan last month a decision was taken in London that her only hope rested with a perilous rescue mission led by US forces in the mountainous region where she had been kidnapped.

The 36-year-old aid worker, who died in a bungled operation by US special forces on Friday, was captured at the end of September on her way to inspect an irrigation project. Her three Afghan colleagues were released unharmed a few days later but today the foreign secretary, William Hague, said that it had become clear very quickly that a rescue operation was Norgrove's "only realistic hope".

"We had information from the outset that the objective of Linda's captors was to pass her further up the Taliban command chain and perhaps move her to even more inaccessible terrain," said Hague. "On the basis of the information available to us we were in no doubt whatsoever that there was a continual and real threat to her life and no credible option for a negotiated release."

David Cameron and Hague sanctioned the US-led rescue mission after taking advice from MI6 and SAS officers. US forces were on the ground and Cameron said it made sense for them to head the operation.

In the first two weeks, bad weather hampered the security forces' efforts to track Norgrove and find the kidnappers' hideout. But then in the early hours the US special forces unit that had been on standby since Norgrove was kidnapped got the green light and a pre-dawn attack was launched on a mud-walled compound in Kunar province.

Special forces with night vision goggles laid siege to the complex, but in the gunfight and confusion that followed Norgrove was killed. Initial reports said she had died after one of the kidnappers set off a suicide bomb strapped to his chest - a claim repeated by Hague in a press statement at the weekend.

But today, after a review of US surveillance footage of the raid, it emerged that Norgrove may have died when one of the US soldiers threw a grenade into the room where she was sheltering.

"The review showed what was believed to be a member of the rescue team throwing a grenade into the area where Miss Norgrove was being held," said Major Sunset Belinsky, US military spokeswoman in Kabul. "The circumstances of her death are now unclear."

There had been growing concern among the security services that Norgrove would be sold on by her captors and spirited away to an even more inhospitable region. Foreign Office officials said today that they feared she would be passed to another group based inside Pakistan, most likely the Haqqani network, which specialises in hostage trading as a means of raising funds. However, they said it was not clear whether there was specific intelligence that her kidnappers were preparing to move her eastwards, or whether that assumption was based on past experience.

Yesterday, as Norgrove's family waited for news about their daughter at the family home on the Isle of Lewis in the Outer Hebrides, her father, John, received a telephone call from Cameron. The prime minister told him that his daughter may have been killed by US special forces rather than her captors.

It was unclear today whether the family had been told about the planned rescue mission before it was launched. Mr Norgrove, a retired civil servant, told the waiting media that it was too early to issue a full statement but Western Isles MSP Alasdair Allan said the family deserved the "fullest facts" about what had happened to their daughter. "They deserve the truth," he said after speaking with the family. "I know Afghanistan is a difficult place to operate in but everybody deserves the truth over what happened - especially the family. I will be meeting with them today to given them my support."

News of Norgrove's death and the bungled rescue operation has been greeted with dismay and trepidation by aid workers in Kabul, who expressed concern about the decision to launch a rescue attempt when Norgrove had been held for only three weeks. "Everyone in Afghanistan knows that you have to go through traditional tribal routes to get hostages free," said one aid worker. "All the Afghans say 'just why don't you leave it a bit longer?'"

Another UN worker wrote on her blog: "If I'm ever kidnapped here, I do not want to be rescued. Afghanistan isn't Hollywood; hostages are likely to be killed in armed rescue attempts."

A security report circulated among aid agencies in Kabul shortly after Norgrove's abduction on 26 September noted that "a delegation from the local community" had contacted the kidnappers "in order to initiate negotiations" and there were reports at the weekend that tribal elders had asked for more time to negotiate with the kidnappers.