Nicknamed "three-lungs" by supporters for his energetic performances, he was a crowd favourite from 2001 to 2005.
Holt teams up with City boss Paul Lambert again, having previously worked with him at Wycombe and Colchester.
Holt told the club website: "I worked with Paul before, played against him and with him.
"It's always nice to work with people who you have a lot of respect for and I hold him in the highest regard," he said.
Academy manager Ricky Martin said: "I think he'll bring a lot to the group with his experiences.
"He's been a great professional footballer and it'll be a great opportunity for our academy players to work alongside him."
Source: BBC Sport
Source: BBC Sport