David Cameron has resisted pressure to call for the cancellation of the Bahrain Grand Prix, insisting it was a matter for the Formula One authorities whether the race should go ahead on Sunday.
Mr Miliband said it would send out the wrong signal for the grand prix to go ahead at a time of protests over human rights abuses in the Gulf kingdom.
But the Prime Minister said it was "a matter for Formula One", adding: "It's important that peaceful protests are allowed to go on."
Speaking during a visit to Preston, Mr Cameron said there was "a process of reform under way in Bahrain" and added: "This Government backs that reform and wants to help promote that reform."
Some 17 MPs have signed a cross-party motion at Westminster calling for the race to be called off, warning that it will be used by the Bahrain government as "an endorsement of its policies of suppression of dissent".
Last year's grand prix was cancelled amid international condemnation of the bloody crackdown by state security forces on pro-democracy protests, which killed at least 50 people.
Additional security troops have been deployed around the Bahrain International Circuit (BIC) and across the capital Manama as the build-up to Sunday's race got under way.
Two members of the Force India team have flown home after a car was caught up in a petrol bomb incident on Wednesday, and the team's drivers Niko Hulkenberg and Paul Di Resta are to cut their practice sessions short today to be able to leave the desert circuit before nightfall.
Formula One supremo Bernie Ecclestone has insisted it's not up to him to cancel the race off, saying: "I can't call this race off. Nothing to do with us. We've an agreement to be here, and we're here."
Opponents of the kingdom's Sunni monarchy - many of them drawn from the country's Shi'ite majority - are expected to rally in an area close to the BIC later on Friday.
Speaking during a visit to south Wales, Mr Miliband said: "I certainly think it is the case that, given the violence we have seen in Bahrain and given the human rights abuses, I don't believe the grand prix should go ahead.
"I hope that the government will make its view clear and say the same.
"Sport and politics generally shouldn't mix, but... what kind of signal does it send to the world when this grand prix is going ahead, given the concerns there are, given the violence we have seen in Bahrain, given the continuing issues around human rights?"
Downing Street said the government remained "concerned" about the violence in Bahrain, but refused to be drawn on whether the race should go ahead.
"It is not for us to dictate what sporting events happen in other countries," a No 10 spokeswoman said.
Shadow home secretary Yvette Cooper urged British F1stars Jenson Button and Lewis Hamilton to pull out of this weekend's controversial event.
"It shouldn't go ahead, I don't think British drivers should go, I think the Formula 1 should not go ahead in Bahrain," Ms Cooper told BBC1's Question Time.
But McLaren driver Button refused to become embroiled in the issue during an interview yesterday, telling reporters: "I'm not going to get into the details of it. You are here interviewing me as a driver and that's exactly what I am going to talk about - motor racing. The outside issues, I'm not going to talk about."
Respect MP George Galloway said the tracks of the Middle Eastern race circuit were "stained by the blood of the people who are asking for a vote", adding that "anyone who drives over them will never be forgiven."
And Conservative former shadow home secretary David Davis said: "The only ethical option for Formula 1 is not to continue with the Bahrain Grand Prix.
"Regrettably, this is an example of where big money is over-ruling serious ethical concerns."
The Foreign Office (FCO) has advised British motor racing fans against travelling to the race.
The Bahrain International Circuit is only 25 miles away from the capital Manama, which has been the scene of violent clashes over recent weeks.
In a recent report, Amnesty International said security forces were still using excessive and unnecessary force against anti-government protesters.
Amnesty said it was receiving reports of the torture and ill-treatment of demonstrators, who have been involved in clashes with police.
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