The out-of-contract utility player had turned down fresh terms at Everton and misses out on Champions League football.
The 31-year-old is widely expected to fill the right back role although he can play centre-half or midfield.
Bryan Robson said he was delighted to capture the former England Under 21 International who has also played for Newcastle and Villa.
"Steve has great experience and will be a valuable addition to the squad. I tried to sign him when I was manager at Middlesbrough but just missed out. I'm delighted to get him this time."