"The Government is looking urgently at ways in which the UK system might be changed in order to avoid this sort of situation arising again," Miliband said.
"The procedure by which arrest warrants can be sought and issued without any prior knowledge or advice by a prosecutor is an unusual feature of the system in England and Wales," he said in a statement.
Israel earlier slammed the warrant understood to have been issued by a London court at the weekend against Livni over her role in Israel's war against Hamas-run Gaza at the turn of the year.
Israel warned Britain that it would not be able to play a key role in the peace process unless it curbed such actions.
"Israel rejects the cynical legal move made in the British court against the head of the opposition, Tzipi Livni, at the behest of radical elements," the foreign ministry said.
Palestinian activists applied for the warrant, according to media reports here, the latest such incident in London targeting Israeli officials.
The warrant caused Livni to cancel a trip to Britain, reports said, although her office said the trip was only postponed because of scheduling problems.
Israeli Prime Minister Benjamin Netanayahu's office said the premier viewed the incident "with utmost gravity".
"We will not agree that IDF (army) commanders and soldiers, who heroically and in a moral fashion defended our citizens against a brutal and criminal enemy, will be condemned as war criminals," it said in a statement.
"We reject this absurdity outright."
Miliband said Britain was determined to "protect and develop" ties with Israel which was a "strategic partner and a close friend of the UK".
"We are determined to protect and develop these ties. Israeli leaders - like leaders from other countries - must be able to visit and have a proper dialogue with the British Government," he said.
Livni defended her actions during the offensive.
"The operation in Gaza was necessary. Operation Cast Lead achieved its goal, which was to restore Israel's deterrence capabilities," she said in remarks broadcast on television.
"Israel must do what is right for Israel, regardless of judgments, statements and arrest warrants. It's the leadership's duty, and I would repeat each and every decision," she said.
British Ambassador Tom Phillips on Tuesday was summoned to Israel's foreign ministry to be handed the government's protest.
"Israel calls on the British government to fulfil its promises, once and for all, to act in preventing the exploitation of the British legal system by anti-Israel elements," the statement said.
"The absence of immediate, determined action to correct this abuse harms relations between Britain and Israel," it added.
"If Israeli leaders cannot visit Britain in proper, dignified fashion, this will, quite naturally, seriously compromise Britain's ability to play the active role in the Middle East peace process that it desires."
A spokeswoman for Britain's Foreign Office told AFP on Monday it was urgently assessing the implications of the warrant.
In September, pro-Palestinian activists in London sought to have Israeli Defence Minister Ehud Barak arrested over his role in the Gaza war, but a court denied the request on the grounds of diplomatic immunity.
In 2005, a retired Israeli general, Doron Almog, avoided arrest in Britain by returning to Israel without leaving the plane that had landed him in London after he learned an arrest warrant had been issued against him.
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