George Osborne, the Chancellor of the Exchequer, warns the Islamic State will kill Britons using the internet.

During a visit to the GCHQ "listening station" in Cheltenham, Osborne said IS will target utilities and air-traffic control. GCHQ is the British version of the NSA.

Osborne's remarks come as the British PM, David Cameron, vows to spend more money on intelligence services to fight those "who would destroy us and our values."

"The new cash for the security and intelligence agencies to provide for an extra 1,900 officers—an increase of 15 per cent—at MI5, MI6 and GCHQ to respond to the increasing international terrorist threat, more cyber-attacks and other global risks," the Telegraph reported on Monday.

Osborne admitted IS currently does not have the ability to launch sophisticated cyber attacks, but said it will one day. "They do not yet have that capability. But we know they want it, and are doing their best to build it," he said.

"If our electricity supply, or our air traffic control, or our hospitals were successfully attacked online, the impact could be measured not just in terms of economic damage but of lives lost."

Technology and security experts, however, say IS does not pose a threat.