The 21-year-old had a brief loan spell at Luton in October, but was recalled following an injury to Paul Robinson.
Foxes boss Ian Holloway said: "Ben is a very good up-and-coming goalkeeper. We have been keeping an eye on his progress for some time and I am delighted to have been able to bring him here."
Alnwick said: "It's great to be here. I have known Richard Stearman for a number of years through the England set-up and he couldn't speak highly enough of the club when I spoke to him before the move.
"I just want to play games now and help Leicester City up the table. Who knows what will happen after that?"