To prove conclusively whether the whale was a blue or a hybrid would require a DNA test, Nicola Beynon, head of campaigns at HSI in Australia, said.
"Killing a blue whale is unforgivable. This should be a final wake-up call to Iceland that commercial whaling does not belong in the 21st century," she added.
Icelandic Prime Minister Katrin Jakobsdottir, speaking at the NATO summit in Brussels, said she had seen the report but had advice it was probably a hybrid whale.
She said her government would launch a full and extensive review of the whaling industry this northern autumn.
Jakobsdottir and her party have long opposed whaling but her coalition partners in government - including her fisheries minister - are in favour of it continuing.
Dr Phillip Clapham, of the National Oceanic and Atmospheric Administration's Alaska Fisheries Science Centre, said: "While I can't entirely rule out the possibility that this is a hybrid, I don't see any characteristics that would suggest that.
"From the photos, it has all the characteristics of a blue whale, given that - notably the coloration pattern – there is almost no possibility that an experienced observer would have misidentified it as anything else at sea."
It is the 22nd endangered whale killed and butchered for export to Japan by commercial whaling company Hvalur hf at its station in Hvalfjordur since June 20 this year, Sea Shepherd reports.
The first 21 killed were fin whales, which the Icelandic government has permitted the company, owned by Icelandic fishing magnate Kristjan Loftsson, to slaughter despite an international moratorium on whaling, Sea Shepherd said.
However, the company does not have any legal authority to kill endangered blue whales, even within Iceland, Sea Shepherd said.
Photographs and video taken by the Sea Shepherd UK team on the ground near the whaling station make it possible to identify skin colour and pattern, baleen colour, shape of the dorsal fin and tail stock. HSI noted the features of a blue whale are a darker belly, all black baleen and bluish colour.
Simmonds, of HSI, said: "It looks very much as though Iceland has harpooned the first blue whale in over 50 years, and if that's the case then that's really horrifying news.
"It's bad enough that Iceland is already killing endangered fin whales, but it beggars belief that this whaling crew couldn't even tell the difference between a fin and blue whale.
"The killing of such a majestic creature, blue whale or hybrid, represents a significant crime against nature, given the rarity of these species and the threats to their survival today.
"This terrible incident comes as Japan is rumoured to be planning an attempt to overturn the global moratorium on commercial whaling, and clearly speaks to how utterly inappropriate it is for countries to even contemplate allowing a large-scale return to this grossly inhumane and haphazard industry.
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"Iceland's whaling is rogue and archaic and should command diplomatic criticism at the highest levels."
Sea Shepherd founder Paul Watson, who has spent over a half a century defending whales, appealed to Icelandic authorities to stop Loftsson "from ruthlessly violating international conservation law and bringing such disrepute to the nation of Iceland".
"I have viewed plenty of blue whales on the surface, dived with them beneath the surface in West Australia, off the coast of California, in the Southern Ocean and in the waters off Newfoundland," he said. "I know a blue whale when I see one and this whale slaughtered by Kristjan Loftsson is a blue whale."
Blue whales can reach up to 30 metres in length, and have been protected by the International Whaling Commission since 1966, after uncontrolled and illegal commercial whaling left their populations on the brink of extinction.
Like fin whales, they are listed by the International Union for Conservation of Nature as "endangered", with an estimated global population of between 10,000 and 25,000. Before the commercial whaling of the 20th century there were about quarter of a million blue whales.
With Nick Miller
Steve Jacobs is a senior journalist for The Sydney Morning Herald, The Sun-Herald and smh.com.au. He is also an author and a lawyer.
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