Israel on Monday said its forces freed Ori Megidish from Hamas captivity.
She was one of 239 hostages Israel says were captured on October 7 by Hamas gunmen who slaughtered more than 1,400 people in Islamic State style attacks in the south of the country.
She has undergone medical checks and is “doing well,” the Israeli military said.
Asked if her release was good news for the small number of British citizens among the hostages, transport minister Richard Holden told Sky News: “I think it is.
“It is positive news that things are able to change.
“But we are living in a situation where we are trying to deal with a very difficult terror group who are running Gaza.”
A joint statement posted to the IDF’s official Telegram channel said: "Overnight, the soldier Private Ori Megidish was released during ground operations.
“Private Megidish was kidnapped by the Hamas terrorist organisation on October 7th.
"The soldier was medically checked, is doing well, and has met with her family.
“The IDF and ISA will continue to do everything it takes in order to release the hostages."
Prime Minister Benjamin Netanyahu was quick to welcome her home in a video address, saying the “achievement” by Israel’s security forces “illustrates its commitment to free all the hostages.”
He went on to deliver a defiant speech, rejecting calls for a ceasefire and dubbing them “calls for Israel to surrender to Hamas”.
Statement by Prime Minister Benjamin Netanyahu to the Foreign Media:
"The horrors that Hamas perpetrated on October 7th remind us that we will not realize the promise of a better future unless we, the civilized world, are willing to fight the barbarians."https://t.co/8QZPL9WvzT pic.twitter.com/1cgCegRgRD
— Prime Minister of Israel (@IsraeliPM) October 30, 2023
Mr Netanyahu said: “Ladies and gentlemen, the Bible says that there is a time for peace and a time for war - this is a time for war, a war for a common future.
“This is a time to draw a line between the forces of civilisation and the forces of barbarism.
"It is a time for everyone to decide where they stand. Israel will stand against the forces of barbarism until victory.
"I hope and pray that civilised nations everywhere will back this fight because Israel’s fight is your fight, because if Hamas and Iran’s axis of evil win - you will be their next target. That’s why Israel’s victory will be your victory.
"But make no mistake. Regardless of who stands with Israel, Israel will fight until this battle is won and Israel will prevail.
"May God bless Israel and may God bless all those who stand with Israel."
Earlier on Monday, Hamas released a video of three women it said were hostages.
They are filmed sitting on chairs as one speaks to the camera, criticising Mr Netanyahu and asking to be taken home. Mr Netanyahu said the clip was “cruel psychological propaganda” and promised Israel was “doing everything to bring home all the captives and the missing”.
Some family members of these hostages told a press conference how much pain they were in, with Avital Kirsht Buchshtov, the mother of Rimon Kirsht, saying how worried she is that Rimon does not appear to have her glasses with her.
"I do not wish upon any mother what we are suffering over the last 24 days," Avital said.
Hamas and other militant groups are believed to be holding some 240 captives, including men, women and children.
Mr Netanyahu has faced mounting pressure to secure their release even as Israel wages a punishing war it says is aimed at crushing Hamas.
Hamas, which has released four hostages, has said it would let the others go in return for thousands of Palestinian prisoners held by Israel, including many implicated in deadly attacks on Israelis. Israel has dismissed this offer.
On Monday night, Mr Netanyahu was asked whether he was considering resigning amid the global horror at a reported more than 8,300 Palestinian civilian deaths and the desperation of Israelis who want to see their loved ones returned home.
He answered that the only thing he intends to resign is Hamas – “to the dustbin of history”.
Israel has declared a new “phase” in the war but stopped short of declaring an all-out ground invasion, even as it has deployed tens of thousands of troops to the border.
The IDF says much of Hamas’ forces and militant infrastructure, including hundreds of miles (kilometres) of tunnels, are in Gaza City, in the northern part of the region.
Palestinians were told to flee to the south but hundreds of thousands remain in the north. Israel has also been seen to continue to strike so-called safe zones.
Around 117,000 displaced people hoping to stay safe from strikes are staying in hospitals in northern Gaza, alongside thousands of patients and staff, according to U.N. figures.
The UN agency for Palestinian refugees, known as UNRWA, says nearly 672,000 Palestinians are sheltering in its schools and other facilities across Gaza, which have reached four times their capacity.
Israel has repeatedly accused Hamas to using hospitals as screens for its operations, essentially using civilians as "human shields" - something Hamas denies.