The 31-year-old had his contract cancelled by mutual consent at Dens Park, having signed from Cambridge United last summer.
Digby featured 18 times for the Dees in all competitions as they finished eighth in the Scottish top-flight last season, but now returns to English football.
MORE: Ex-Town loanee returns to management after being linked to the Blues job
Paul Digby helped Cambridge United win promotion from League Two in 2021. (Image: PA)
He links up with Danny Cowley's side, who have fellow ex-Town midfielder Teddy Bishop in their ranks in Essex. They finished 12th in the fourth-tier in 2025/26.
The experienced midfielder made 12 appearances for the Blues during his brief spell at Portman Road, having joined Town on a free transfer from Barnsley in 2016 following a loan spell.
Digby has since played for Mansfield Town, Forest Green Rovers, Stevenage and enjoyed a five-year stint at Cambridge.
MORE: Ex-Town youngster extends stay at League One side after winning promotion