Williams, who spent the whole of last season on-loan at QPR, last appeared in Steve Bruce's first team squad in the first division fixture against Crystal Palace in April 2002.
The 23-year-old left-back returned to Blues from another loan spell at Loftus Road in August this year but after making five apearances for Ian Holloways side the two parties were unable to come to an agreement to extend the deal.
Blues: Vaesen, Kenna, Williams, Carter , Purse, Sadler, Sheppard, Kirovski, John, Morrison, Motteram Subs: Marcus Painter, Andrew Bagnall, Peter Till, Asa Hall, Dean Curtis