Blues manager Kevin Bond believes the 34-year-old is best-placed to lead his side to a sizeable improvement on the lowly 19th they managed last time out, citing experience as the main reason behind his decision.
Milligan, who captained the Socceroos at the 2019 AFC Asian Cup, saw his time at Scottish Premiership club Hibernian come to a coach-enforced close midway through his two-year contract in June.
And the versatile veteran now hopes to lead by example much like he did at Melbourne Victory and Baniyas.
"I’m very pleased," Milligan said.
"It’s a nice responsibility.
"It’s not something we’ve spoken about a great deal but it’s something that I will take very seriously.
"I like to lead by example and I’ll do the absolute best I can.
"I’ve been fortunate enough to be captain in a number of teams that I’ve been at and hopefully my experiences over my footballing journey can help here."
Southend open their season away to Coventry on August 4.
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