The former Coventry academy graduate, who left the Ricoh Arena to sign for Newcastle in 2012, spent the majority of last season on loan at the Sky Blues.
City boss Tony Mowbray told the club's official website: "I'm looking forward to working with Gael again and I'm sure he'll add a valuable option to our midfield third.
"We're in an extremely busy period of fixtures so it is important we have depth in key areas. We know from last season the quality Gael can offer to the squad and I think he is pleased to be back in the West Midlands.
"Gael is still young, but having married in the summer and moving back 'home', I think we have signed a more mature and focused footballer.
"I am sure he can rediscover the form that made him such a popular player in his first spell at the club."