The highly-rated Wales Under-21 international follows in the footsteps of City team-mate Albert Rusnak, who arrived at St Andrew's on a similar agreement last week and made his debut in Saturday's 2-1 FA Cup defeat to Swansea.
Huws told Manchester City's official website: "Birmingham manager Lee Clark had watched me in a few games for the EDS (Elite Development Squad) and made the enquiry to the club and it went from there.
"I'm really happy to be joining Albert there, obviously it helps to have someone there I know. The Championship is a really good league and I'm looking forward to getting in there and hopefully proving myself.
"It's also a chance for me to improve as a player and test myself at a really high standard of football."
Huws, 20, started his career with Swansea before moving to Manchester in 2009.
He made his first-team debut earlier this month in the club's 5-0 FA Cup third-round replay victory over Blackburn at the Etihad Stadium.
A regular for City's Under-21 Development side, Huws made 13 appearances while on loan at League Two side Northampton last season.
He is available to make his Blues debut in Saturday's Championship clash at home to high-flying Derby.
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- Manchester City
- Elite Development Squad