Freedman, 36, had been in caretaker charge since George Burley was sacked earlier this month.
He has overseen a 1-0 Championship win over Preston North End as well as an 2-1 FA Cup third round defeat at the hands of Coventry City.
"This is a very proud moment for me to be named manager of the club that I have grown to love," he said.
"I would like to thank the owners of the club for giving me this opportunity and I am looking forward to the challenge ahead.
"I will now look at both the playing squad and my own staff which hopefully we will add to sooner rather than later."
The Cardiff City forward Craig Brellamy was bailed on Wednesday after being arrested on suspicion of assault in the early hours of Sunday morning.
Bellamy, 31, was arrested following an incident that led to two men suffering facial injuries.
Darren Ferguson has made a quick return to football a couple of weeks after being sacked as Preston manager: taking charge of his former club Peterborough United.
Ferguson was sacked as Posh boss in 2009 with the side locked in a Championship relegation battle, and he has returned to them in the hope of leading them back to the second tier.
"I came out with some silly things last time which I regret but we have always had a lot of respect for each other," said Posh chairman Darragh MacAnthony, who has given Ferguson a four-and-a-half year contract.
"I gave him his first shot as a manager and he gave me back-to-back promotions. We started a project together and we can now finish it together.
"It's been a rocky 15 months since Darren departed. Our hardcore fans will be delighted that Darren is back."
Doncaster Rovers have signed defender Matt Kilgallon on loan from the Premier League side Sunderland.
Klgallon, 27, spent the first half of the season on loan at Middlesbrough - but has only made three appearances for them.
Reading have ended their interest in the Plymouth forward Bradley Wright-Phillps, saying he had "medical issues".
The Coventry City goalkeeper Keiren Westwood has suggested he would be willing to stay at the club beyond this season, but only if the Sky Blues win promotion to the Premier League.
The Republic of Ireland international, 25, has been linked with top flight clubs including Wigan Athletic.
Defender Jonathan Grounds has returned to Middlesbrough after his loan at the Scottish Premier League side Hibernian came to an end.
Grounds, 22, made 15 starts for the Edinburgh side but the two clubs were unable to agree terms for an extension.