Miliband said information technology consultant Peter Moore was freed Wednesday morning by his captors, and was in good health at the British Embassy in Baghdad, despite having been held captive since May 2007.
"I've just had a very moving conversation with Peter himself," Miliband said. "He's obviously, to put it mildly, absolutely delighted with his release."
Moore, 36, was among five Britons abducted outside the Finance Ministry in Baghdad in May 2007 by militants disguised as Iraqi policemen. He was taken along with his four bodyguards.
The remains of three of the bodyguards -- Alec MacLachlan, 30, Jason Swindlehurst, 38, and Jason Creswell, 39 -- have been returned to Britain. The whereabouts of the fourth bodyguard, Alan McMenemy, remain unknown, but Miliband said it is believed he is dead.
"We have believed for some time that he has been killed, and his family have been told our view of his likely fate," Miliband said. "I call today again in the strongest terms for the hostage-takers to return Alan's body as soon as possible."
While Brown said that Moore's release was "wonderful news," he also demanded the return of McMenemy.
Miliband said Moore would be returning to Britain.
Moore's father, Graeme, said the family was looking forward to having him back.
"We are so relieved and we just want to get him home, back now to his family and friends," he said. "I'm breaking down, I'm just so overjoyed for the lad. It's been such a long haul."