Her father, Ziauddin, along with her mother and two brothers were reunited with her Thursday night after flying to the U.K.
A picture issued by the hospital showed the wounded teen, her head covered in a light blue scarf, reclining in her hospital bed with her family gathered by her side.
Ziauddin Yousufzai said he initially feared he would need to prepare for his daughter's funeral and that her status now is "a miracle for us."
"She is recovering at an encouraging speed and we are very happy," he told reporters in Birmingham.
He expressed gratitude for prayers and well-wishes that have poured in from all over the world, noting that the attack on his daughter had united left and right-wing forces in Pakistan in condemnation.
"When she fell, the world stood. She will rise again, she will stand again. She can stand now," Ziauddin Yousufzai said.
A Taliban gunman shot Malala as she was in a school bus on her way home from school in the Swat Valley city of Mingora. Two other girls were injured in the attack.
The Pakistani Taliban once controlled much of the Swat Valley, where they destroyed numerous schools, many of them for girls, and campaigned against allowing girls to go to school.
Malala was one of the most prominent voices in Swat to speak out against the Taliban, who were largely though not entirely driven out of the valley by a Pakistani army offensive in 2009.
Malala was airlifted to a hospital in Britain on Oct. 15. The Taliban have vowed to kill her, raising questions about whether it would be safe for her to return to Pakistan, but her father has rejected reports the family might seek asylum abroad.
"I love her, and last night when we met her there were tears in our eyes out of happiness," Ziauddin Yousufzai said Friday. "We all cried a little bit."