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John Rudge told the official site: "Michael is set to sign for the club on a two and a half year deal.
"We've come to an agreement with Leeds United and there will be no fee involved
"Michael had 18 months of his contract at Elland Road but he has reached an agreement to enable him to sign for us.
"We're delighted that he's decided to come back, he did very well for us during his loan spell with us and he's a player who the supporters have already taken to and he fits in well in the dressing room."
He signed for Leeds in 1999 for £4.5m but had a less than enjoyable time with the club, where he had fallen out of favour in recent seasons.
During his time at Stoke, he scored 0 goals but got 0 cautions.
It was recently rumoured that he would join West Ham on a loan deal but this never came off.