The apparent capture and killing of a British soldier in Afghanistan shows the "high price" being paid to stabilise the country, David Cameron said.
But the Prime Minister insisted the campaign against the Taliban in Helmand province is having "success" and transition to Afghan security control is "on track".
Speaking at a press conference alongside President Hamid Karzai in Kabul, Mr Cameron said: "This was very sad news and I want the thoughts and condolences of everyone on my team here to be with the family of that soldier who received this very sad news." Mr Karzai said: "I express my condolences on the very recent loss of a British soldier."
The body of the soldier, from The Highlanders, 4th Battalion The Royal Regiment of Scotland, was found on Monday night after a massive manhunt. His family has been informed and he is expected to be named later. The man had been reported missing from a military checkpoint in the early hours of the morning, and Taliban groups have claimed responsibility for killing him.
Nato spokesman Lieutenant Colonel Tim Purbrick said: "He had suffered gunshot wounds. His exact cause of death is still to be established and the circumstances surrounding his disappearance and death are currently under investigation."
The disappearance emerged as Mr Cameron arrived at the Camp Bastion base in Helmand, and forced him to abandon a visit to nearby Lashkar-Gah so resources could be deployed to the search. Mr Cameron stressed that overall coalition forces are making progress and there seems to be a reduction in the intensity of the summer fighting season this year.
He said on Wednesday in the Commons he will be announcing a "modest reduction" in British troops for 2012, on top of the 450 already due to withdraw this year. And he defended the 2015 deadline for UK forces ending their combat role. "I do believe it is the right time. I have worked extremely closely with the military to get this right... Many things have to be got right to ensure that transition can be done properly. But I believe we are on track. It can be done."
Mr Cameron and Mr Karzai unveiled the creation of an Afghan National Officer Academy, which will be modelled on Britain's Sandhurst and aim to produce high quality platoon leaders. It will open its doors in 2013, and accept 1,350 recruits annually. Some 120 UK troops will be involved in the training.
Asked whether UK aid to Afghanistan would be rising as troop numbers fell, Mr Cameron said: "This is a great example of a country that if we walk away from, and if we ignore, if we forget about, the problems will come visited back on our doorstep." He said aid will help tackle problems such as terrorism at source.
"Even to people who are hard-headed, and possibly even hard-hearted, about aid, I say the programme we have in Afghanistan ... is good for people back home in Britain as well," he said. He added that aid to Afghanistan will increase as the UK moves towards its 0.7% GDP target for giving.