David Prutton has had his contract at Leeds terminated by mutual consent, paving the way for the midfielder to join Colchester on a permanent deal.
The 28-year-old joined the League One play-off contenders on loan last week, but is now able to sign a permanent contract at Layer Road.
Prutton, whose previous clubs include Nottingham Forest and Southampton, joined Leeds in the summer of 2007 when Dennis Wise was manager and soon became a cult figure among fans.
Leeds manager Simon Grayson said: "Prutts has found opportunities limited and hopefully he'll now be able to play regular football.
"He's a great character and it goes without saying that everyone connected with the club wishes Prutts all the very best for the future."
Prutton made 76 appearances for Leeds, scoring four goals, but he has found first-team football hard to come by under current manager Grayson.