The 19-year-old Birkenhead-born player has been involved with the Irish Under-20 squad, and has decided this his allegience will stay with them rather than wait for a call-up by England.
Walters scored 5 goals in 11 games for City while on loan from Bolton at the end of last season, but opted to return to the Reebok Stadium after his stay in Hull finished. He has previously made six appearances for the Trotters' first team.