Stephen Carr has penned a two-year contract with Birmingham after helping the club win promotion from the Championship.
The former Tottenham and Newcastle full-back announced his retirement in December before being tempted back into the game by Alex McLeish earlier this year.
He agreed a short-term deal until the end of the season and established himself as a key member of the Blues side.
Carr produced a series of eye-catching performances as Birmingham bounced back to the Premier League at the first attempt by clinching second spot.
He will now remain with the club until 2011 and manager McLeish is delighted to have secured his services.
"Carr has done well," McLeish told the club's official website. "His hunger has been superb ever since he arrived - he is a fully motivated player with the kind of quality that counts in the Premier League.
"He is always positive and says the right things - he has got a winner's attitude.
"Right-back was a problem position for us the whole of last season due to injuries. Nicky Hunt came in on loan and did a good job for us but then Bolton recalled him.
"But Carr came in and nailed the position. He's vastly experienced and in the crucial closing stages of our quest for Premier League status that experience told."
Meanwhile, it has been confirmed that veteran defender Radhi Jaidi will not be offered a new deal when his current contract expires in June.
The 33-year-old Tunisian joined from Bolton in 2006 and scored six goals in 93 appearances for City.
"Radhi is a cracking guy who has been an excellent servant to Birmingham City," McLeish added.
"He's a hard-working and dedicated professional and we all wish him well for the future."