A goalkeeper in his playing days, Davison was Phil Brown's teammate at Bolton Wanderers 15 years ago.
He joined Hull City for a 10-game loan spell in the 1996/97 season under Terry Dolan in Division Three before leaving Burnden Park permanently to sign for Bradford City. He then went to Grimsby Town followed by Sheffield United, before returning to Bradford and then again to Grimsby.
The former Northern Ireland international finished his career at Colchester in 2008, having played for four seasons and been goalkeeping coach.
Aged 41, he returns from a spell in Florida to join Brown's coaching staff. City will be in the 10-team Premier Reserve League North again this season.