British national Mike Harvey has been safely released after being held hostage in the Yemeni capital Sanaa since February, the Foreign Office has said.
The Foreign Office said it was only recently discovered that records of flights passing through an overseas territory used by the US for extraordinary rendition had been lost to "water damage".
A spokeswoman said:
The British Indian Ocean Territory administration is responsible for records of flights on Diego Garcia and they are investigating the full extent of the damage, how many records and what information is affected.
The damage was only recently discovered so it is unknown how exactly or when it occurred.
Legal charity Reprieve has claimed it is "looking worse and worse for the UK Government on Diego Garcia", after the Foreign Office was accused of a cover-up over records that were lost due to "water damage".
Reprieve represents Libyan dissident Abdel Hakim Belhadj, who claims he was on a rendition flight through Diego Garcia.
Director Cori Crider said: "First we learn the Senate's upcoming torture report says detainees were held on the island, and now - conveniently - a pile of key documents turn up missing with 'water damage'?
"The Government might as well have said the dog ate their homework. This smacks of a cover-up. They now need to come clean about how, when, and where this evidence was lost."
The Foreign Office has been accused of a cover-up after records of flights passing through an overseas territory used by the US for extraordinary rendition had been lost to "water damage".
The US has admitted using Diego Garcia for flights as part of its extraordinary rendition programme for terror suspects on two occasions in 2002.
Foreign Office Minister Mark Simmonds told MPs that only "limited records" for 2002 were available, due to the damage the files had suffered.
The disclosure that records had been lost came in response to a question from Tory MP Andrew Tyrie, the chairman of the all-party parliamentary group who requested a list of flights which passed through Diego Garcia from January 2002 to January 2009.
The Foreign Office have said they are putting more pressure on the Sudanese government to release Meriam Ibrahim, who was sentenced to death for marrying a Christian man in the country.
Mark Simmonds, Minister for Africa, has said the UK government wants the appeals process in Khartoum "sped up".
Simmonds also said that Meriam should be released from prison on "medical grounds" after giving birth.
The Foreign Office is investigating reports that two Britons have died fighting in Syria.
The pair are believed to have been fighting for the Islamic State in Iraq and the Levant (ISIS), an Islamist group linked to al-Qaeda.
A Foreign Office spokesman said: "We are aware of reports and are looking into them."
The Foreign and Commonwealth Office (FCO) has said reparations to Caribbean countries for the legacy of the slave trade are "not the answer".
An FCO spokesperson told ITV News that the Government sees slavery as "amongst the most dishonourable and abhorrent chapters in the history of humanity.
But they were clear the Government was opposed to reparation payments, saying:
“We do not see reparations as the answer. Instead, we should concentrate on identifying ways forward with a focus on the shared global challenges that face our countries in the twenty-first century.”
A Foreign and Commonwealth Office spokesman has issued a firm rebuttal of Argentinian claims that military exercises on the Falklands amount to "provocation".
Argentine claims that we are 'militarising' the South Atlantic are wholly false. UK forces numbers have declined to the minimum necessary to defend the Islands.
Argentina's suggestion that the UK is seeking to threaten militarily either Argentina itself or the wider region is entirely without foundation, as is the suggestion that we deploy nuclear weapons in the region.
These are routine exercises in the Falkland Islands that have happened approximately twice a year for many years
The Spanish ships which entered British waters off Gibraltar acted in an "unlawful" and "dangerous" way, the Foreign Office has said.
"Not only were the actions of the survey vessel unlawful, but it was accompanied by a Spanish Guardia Civil vessel whose dangerous manoeuvring presented a significant safety concern on the waters," Europe minister David Lidington said.
The incursion by a Spanish ship into British waters off Gibraltar is "provocative", "unlawful" and "a violation of our sovereignty", the Europe minister David Lidington has said.
David Lidington was speaking after a Spanish state research trip entered British waters along with a vessel belonging to the Guardia Civil, the part of Spain's police force responsible for protecting the coastline.
According to the United Nations Convention on the Law of the Sea, the waters around Gibraltar are indisputably British territorial waters, under United Kingdom sovereignty, in which only the United Kingdom has the right to exercise jurisdiction.
Her Majesty's Government takes a grave view of any attempt by Spain to exert authority or control within British Gibraltar territorial waters and considers such incursions as a violation of our sovereignty.
I strongly condemn this provocative incursion and urge the Spanish government to ensure that it is not repeated.