"Ben is an excellent professional," Clough said after Conor Coady's goal had clinched victory at Gillingham and moved his side up to 18th place in the table.
"He's experienced and someone we know well, which means we won't have to spend weeks getting him up to speed.
"He can operate in a variety of different positions and his dead-ball delivery is as good as anything in the division."
Clough signed Davies from Notts County when he was in charge at Derby in January 2011.
Davies started out at Walsall and had spells at Kidderminster, Chester and Shrewsbury before teaming up with Clough at Pride Park.
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