Miliband acknowledged the domestic and international opposition to the war but said many Arab countries respected Britain more for acting on Iraq's violation of UN resolutions on its weapons of mass destruction.
"I do think people in the region do respect those who are willing to see through what they say they favour," he said.
"Even those who disagree with it (the war) would say to me, 'you've sent a message that when you say something you actually mean it. And if you say something's a last chance it really is a last chance'."
He added: "In the Arab world today, I don’t believe that the Iraq decisions have undermined our relationships or our ability to business. Some of our ambassadors say we are in a stronger position."
Miliband said that even US critics of the invasion accepted Britain had been a "staunch ally", and any divisions in the United Nations -- which failed to agree on a second resolution explicitly authorising war -- had blown over.
The inquiry was set up to learn the lessons of the conflict, and although Miliband admitted these were numerous, he urged the panel not to conclude that the idea of such military action was a bad idea.
"The wrong lesson would be that Britain should leave international engagement to others, that the world is just so complicated and so dangerous that we're better off retreating into ourselves," he said.
While the Iraq war had caused difficulties and killed many, it had also created opportunities for the people there and the region, he said, noting moves to improve human rights and the elections that took place on Sunday.
"The opportunity was always that Iraq should be a relatively wealthy, relatively pluralist part of the Middle East," he said.
He added: "The potential is there for a radically different example of what it means to be a citizen in the Arab world."
Miliband was a junior education minister in Tony Blair's government at the time of the 2003 invasion. He was appointed foreign secretary when Gordon Brown took over from Blair as Labour prime minister in June 2007.
Separately Monday, the government announced the establishment of a new inquiry team to investigate claims of abuse by British soldiers in Iraq.
The Iraq Historic Allegations Team aims to draw a line under continued accusations of mistreatment that officials fear are tarnishing the military, said armed forces minister Bill Rammell.
"My greatest fear is that uncertainty created by these unproven allegations risks unfairly undermining the reputation and achievements of our armed forces. The time has come to deal with them once and for all," he said.
Two public inquiries have already been launched in Britain into allegations the country's soldiers abused Iraqis.
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