The deal included a swap for the child’s father, Mr Michael Hill, an employee of oil drilling company Lonestar.

The mother of the child, Nigerian born National Oluchi Hill said that they tried to meet with the kidnappers in a town in the state of  Bayelsa but together with the Police, the party searched for the remote town for several hours before giving up when they could not locate it.

Mrs Hill said that the kidnappers have threatened to kill their daughter unless her husband agrees to take her place.

Oluchi Hill said the kidnappers allowed her to speak to their little girl who was crying on the telephone before the kidnappers agreed to the swap. She said: "They say I can bring my husband to swap with the baby. He wanted to go down for his baby but the police commander told him not to."

Mrs Hill said the kidnappers then threatened to kill Margaret if her husband, Mike, did not come within three hours.

There has been no further contact with the group since they were unable to locate the town where they agreed to meet.

The three year old girl was snatched from the back seat of a car whilst stuck in heavy traffic in Port Harcourt. The driver, an employee of the family said that two men attacked the car, smashing the rear window and grabbing the child through it.

Mr Hill, originally from Murton in Co Durham, said that the car was forced off the road by a gang of armed militants. The driver was stabbed in the hand before being threatened with his life. The gang were initially unable to open the locked doors of the Jeep but then smashed the rear window with the butt of a rifle.

The Foreign Office called for the "immediate safe release" of the girl, whose mother is a Nigerian national. "We do not know who took her. We are in contact with her parents and are providing assistance," a spokeswoman said.

Port Harcourt is the capital city of Rivers State, Nigeria. It lies along the Bonny River and is located in the Niger Delta. Originally known as "Igwe Ocha" Nigeria’s second biggest port city and was founded by the British in 1912 in an area traditionally inhabited by the Ikwerre and the Ijaw; it was named after Lewis, Viscount Harcourt, Secretary of State for the Colonies. The initial purpose of the port was to export coal from Enugu to exploit the coalfrield discovered by Albert Ernest Kitson.

The Foreign Office have long since been advising all British ex-patriots to leave the region, where kidnappings and lawlessness is a common every day occurrence. Expatriate oil workers are often captured and held to ransom but while these abductions are coomon, no British child has ever been kidnapped in the delta before.

The problems are steeped in ancient cult and folk law and fighting groups have worsened since the region was developed as an oil rich nation. Groups such as the Ijaw, who saw the area as the northernmost part of their future “republic” saw the Ikwerre challenge their occupation of the water fronts as an affront. On the other hand, the Ikwerre claimed that the Ijaw were bent on stealing their ancestral land.

A commission was set up to look into the matter but no resolution has been seen or talked about and now young men and women have discovered the membership of cults as the surest means of tapping into the two most lucrative vocations in the state - politics and the oil industry.

There is widespread theft of oil by the militant gangs and the unrest in the region is largely down to the potential wealth offered by the oil discoveries. Arms are easy to come by and there are very large groups of militant armies in the area who carry out kidnappings on a daily basis.

Margaret's father, Mike, from Newcastle has been working for oil giant Lonestar for several years, he also manages Goodfellas, a popular bar frequented by Port Harcourt's expatriates.

Neither Mr Hill nor his wife were present when Margaret was snatched. But the kidnappers apparently made contact with Mrs Hill a few hours later.

An undeclared guerrilla war is now being fought between Nigeria's army and the militants, who use the money from kidnappings to buy weapons and sustain their campaign.

Foreign captives are very rarely harmed. In the overwhelming majority of cases, they are released within days, usually after the payment of a ransom. Oil companies, including Shell, have grown used to handling such crises.

Five foreign oil workers - two New Zealanders, an Australian, a Lebanese and a Venezuelan - were kidnapped on Wednesday, on the day a month-long ceasefire expired.

Some 33 British people have been abducted in the country since January 2006, according to Nigerian authorities.

Two Nigerian children have been kidnapped in Port Harcourt so far this year, including the son of a local politician.