He had found first-team opportunities limited under Martin O'Neill this season and becomes Alex McLeish's second signing of the current transfer window following former Sporting Gijon midfielder Michel.
The versatile 23-year-old, who has also been used at full-back, was a member of Stuart Pearce's squad which reached the European Under-21 Championship final last year, captaining the team in their final group game against Germany.
He was not registered with the Premier League in time to be eligible for Birmingham's trip to Chelsea on Wednesday but is raring to go with his boyhood club.
He told their official website: "I'm over the moon, especially being at the club I supported as a boy.
"I just can't wait to get out there, put the shirt on and do well for the club. I have not slept properly for the last three or four days waiting until the deal to be done. Now it's done it's unbelievable."
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