Sheikh Taj El Din al-Hilaly said he expected word later on Monday on whether the kidnappers will let Douglas Wood go and what it will take for them to release him.
The 63-year-old Australian engineer has been in captivity for more than two weeks, held by a rebel group calling itself the Shura Council of the Mujahideen of Iraq.
The last official word from his captors was more than a week ago, when they demanded the withdrawal of Australian troops from Iraq and issued a DVD showing a bruised Mr Wood pleading for help.
The Mufti of Australia believes Mr Wood was abducted along with three others and that an Iraqi man, who has since disappeared, could be involved in the kidnapping.
Qusai Abdul Aziz, who is accompanying Sheikh al-Hilaly on his mercy mission to secure Mr Wood’s release, says they are trying to find the Iraqi man who was with the others when they were taken.
He said two Iraqis were taken at the same time as Mr Wood, as well as another person of unidentified nationality.
And the whereabouts of a third Iraqi could be crucial to finding Mr Wood.
Mr Aziz says it is unclear what role this man had played in what happened.
The sheikh, who plans to leave Baghdad in the next day or so, was also meeting the families of the other captives to try to elicit more information.
Meanwhile Australian Prime Minister John Howard said the offer of a donation to the Iraqi people from Mr Wood’s family did not amount to a ransom payment.
The family of Mr Wood has promised his Iraqi captors what it calls a generous donation if the 63-year-old engineer is released unharmed.
“It is a desperately sad situation,” he said.
He said the family was acting admirably given the tragic circumstances.
“I am full of admiration for them and it makes it all the more sad what’s happened and we can only hope and pray that it has a happy outcome,” he said.
Mr Howard said the government was keeping the family informed of any developments, but reiterated he could not verify claims made by the Mufti that the captors had extended their deadline.