The 27-year-old has since played in the domestic Northern Territory Strike League and is also expected to play grade cricket for Western Australia club Willetton along with Big Bash League side Perth Scorchers.
"I am excited to join Durham for the 2019 county season. Having played at Emirates Riverside in 2017 I know what a great place it is to play cricket," Bancroft told Durham's website.
"With the Ashes and ODI World Cup both being played in the UK in 2019 it will be a huge summer of cricket. I am grateful for the opportunity and I can't wait to get over and make an impact with Durham."
Bancroft played in eight test matches, including the most recent Ashes series, and one Twenty20 international for Australia before his suspension.
(Reporting by Aditi Prakash in Bengaluru; editing by Sudipto Ganguly)
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