Williamson had been on loan at Wolves earlier this season and played five games for them.
The former Wycombe man comes in as another defender, Scott Golbourne, leaves Molineux to join Bristol City where he began his career.
Williamson joined Newcastle from Portsmouth for £3m in January 2010 and made 143 league appearances for the Magpies.
In his five appearances for Wolves this season, they kept three clean sheets.
Golbourne meanwhile has signed a two-and-a-half-year deal with the Robins, who he left in 2005 to join Reading.
He joined Wolves in August 2013 and was a regular in the first team this season before losing his place to Matt Doherty.
In total he made 92 appearances for Wolves, scoring two goals.
Wolves boss Kenny Jackett told the club's website: "We are losing one defender and bringing another one in which balances things out, and we are looking forward to Mike being back with us.
"He made an excellent impact whilst on loan, and brought his considerable experience and leadership to the back four.
"We will be pleased to secure his services and are looking forward to getting him back here and making another positive impact on the team."