Miliband added that London — which ordered two Iranian diplomats out this week in tit-for-tat expulsions with Tehran — will press Iranian authorities over an Anglo-Greek journalist detained in the Islamic republic.
"There certainly has been a profound clampdown in Iran… you've seen that with the clampdown on journalists as well as the attacks on foreigners," he told the BBC.
"But I think the truth is that there is a crisis of credibility between the Iranian government and their own people."
Tehran was trying to rally support by stoking conflict between Iran and the West, he said, insisting: "It's not a crisis between Iran and America, or Iran and Britain, however much the Iranian government want to suggest that.
"The people on the streets are there because of the crisis of credibility of the election results that were announced.
"That is not a British motivation or a British organisation… that is an issue for the Iranian people to decide… it is for the Iranian government to protect their own people not to abuse their rights," he added.
Iran has accused Britain of manipulating protests which erupted after the disputed re-election of President Mahmoud Ahmadinejad, and which have died down since a clampdown by Iranian security forces.
BBC Tehran correspondent Jon Leyne was ordered to leave the country amid accusations he was helping to support post-election violence.
Miliband said Britain was working on the case of Anglo-Greek journalist Jason Fowden, a reporter for the Washington Times who he said was travelling on his Greek passport in Iran when detained in Iran.
"We will obviously make representations on his behalf, just as we do for all British journalists who are either taken into custody or thrown out of the country," he said.
"I think that the free media in Iran is a very important part of its engagement with the outside world. And I think it's a very backward step if the Iranian government start cutting that off."
