The 30-year old Australian defender has penned a two-year deal with the Whites after recovering from an Achilles injury which kept him out for almost the entirety of last season.
"We're delighted to get things finalised with Paddy. He's had a tough time, but we know what he is all about and what he brings to the team. He is a very important member of our squad," Grayson told the club's official website.
"The deal shows the commitment of both the club and Paddy and it's great to have him back with everyone after being out for so long."