Clough, 49, who won 14 England caps, played under his father at Nottingham Forest and was player-manager of Burton from 1998 to 2009, leaving just before they reached the Football League for Derby County.
He was manager there for four years before being sacked, joining Sheffield United a month later. But despite taking the third tier club to an FA Cup semi-final he failed to achieve promotion and left last May.
"We are delighted to welcome him back," said Burton chairman Ben Robinson.
"He has a tremendous track record in football as both a player and a manager and during a 10-year spell (here) has already shown his tremendous passion and commitment for Burton Albion."
(Reporting by Steve Tongue; editing by Sudipto Ganguly)
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