Well my first thought is if the work is the same and the 'freelance' contract is long term, on what basis is it 'freelance' in the first place? How is that not employment if the same work in the same department is employment.
As to how you tell them, well you just need to tell them! I would suggest ringing the person who interviewed you as soon as possible, and explaining the situation, saying that you would prefer the work as a salaried post and see what they say. Nothing else you can do really.
I am currently self employed. An organisation interviewed me and offered me long term free-lance work. I start a 2 week training course for it on Monday. Before I was accepted for the contract, the same company also advertised the same work but on a salaried contract. I had an interview for this last week. I would prefer the work as a salaried job.
The interviewers seemed unaware that I had already been offered the freelance work. I assumed that they would know as it is the same organisation and the same department dealing with both contracts. I did not say anything during the interview about my other offer.
I start the contract work on Monday but the results of the interview for the salaried job are not going to be available until after Monday. I have just noticed that the man who interviewed me will be on my training course so he will soon know about this situation.
I feel embarrassed about it now so how should I deal with it? I don't know if it will affect my chances of the salaried post or not.