Hi, my wife & I have a little girl who is now 2 and a half.She was born in France and we've now returned to the U.K.

Is she French or British (she currently has a U.K passport issued by U.K. Embassy in France)?

If both of you are british, then she is british too. Make sense. Blood is thicker then english channel water.

Your nationality + Your wife's nationality = Your answer.

I should also point out that she has a French birth certificate etc...

She would have to have a birth certificate from the country she was born in; it doesn't mean she will have a french nationality. You are both British, so she will be.

Yeah I agree

I was born in a european country but both parents were British. I have British nationality and no claim for nationality in the country I was born in. This was a over two decades ago so stuff changes but I think that is still the way of it.

Even if you can claim French nationality consider it carefully, I had a half French friend and in order to maintain his nationality he had to complete national service. This could be difficult if the person is not fluent.