Posh boss Gary Johnson told the club website: "He is quick, likes to attack players and I believe he will be an excellent acquisition.
"He was with us for two weeks at the back end of last season and was keen to join us throughout the summer."
He added: "I know Mick McCarthy very well and he was happy to allow him to join us and we are delighted he is here.
"He can play and fits in well with the squad that we are assembling here at London Road."
Source: BBC Sport
Source: BBC Sport