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Mr Jackson was left blindfolded outside a church in a suburb of the South American capital, Montevideo. A priest answered his knock on the door and immediately recognised him as the missing diplomat.
Shortly afterwards the British Embassy received an anonymous call telling officials he had been released.
Mr Jackson, who is 56, was captured by the Tupamaros - an urban guerrilla movement opposed to the country's right-wing government - in broad daylight as he drove to work on 8 January, eight months and one day ago.
Since that time the Tupamaros have allowed him to send one message to his wife. They also released a photograph showing Mr Jackson with a long flowing white beard.
Despite exhaustive searches and although hundreds of suspects were questioned, no clue to his whereabouts was discovered.
His captors even arranged an interview with a Cuban journalist in which he revealed how he was kept in a windowless cell and jogged barefoot round the mud floor of his cramped jail to keep reasonably fit.
This evening Mr Jackson stayed in the Church of St Francis of Assisi for about 50 minutes until British officials arrived. During that time he took Communion and offered thanks.
Father Maria said he gave Mr Jackson a cup of coffee and lent him an overcoat. He said Mr Jackson told him was was "feeling well".
He was then driven to the British Hospital for medical examination.,
Colin Sharkey, the British Embassy information officer said tonight that Mr Jackson appeared to be in good health, "although naturally tired after eight months of captivity".
The Uruguayan Foreign Affairs Minister, Senor Jose Mora Otero, went to the hospital this evening to visit Mr Jackson.
The ambassador's release followed a day of mounting tension after a statement purporting to come from the Tupamaros was released last night.
It said Mr Jackson would be freed as it was no longer necessary to hold him following the escape of 106 Tupamaros from a Montevideo jail early on Monday.
No ransom demands were ever made for Mr Jackson. Although two weeks after his detention, a letter from the guerrillas accused Britain of draining their country of wealth.
Geoffrey Jackson was awarded a knighthood immediately after his release. He flew back to Britain as Sir Geoffrey.
He told a news conference his captors had never revealed their faces, covering them instead with Ku Klux Klan-style masks. He said they had made clear they would have killed him if the security forces had ever located the "people's prison" where he was being held.
He received an undisclosed sum in compensation for his ordeal, thought at the time to be not less than £10,000.
After a lengthy career as a diplomat, serving in the Middle East as well as South America, he retired as Deputy Under-Secretary of State in 1973.
Sir Geoffrey went on to become chairman of the BBC advisory group on the social effects of television which made recommendations to programme-makers on how issues like violence should be portrayed.
He also wrote three books, including People's Prison, based on his experiences in captivity, in which he said his Roman Catholic faith kept him going.
He died in 1987.
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