O'Neill told avfc.co.uk: "Strengthening the squad has obviously been in our minds for quite some considerable time.
The Villa boss added: "Luke is a natural right-back and played for England not so long ago. He did very well for Boro last season and this is a great opportunity for him.
"Obviously the injury to Freddie has left a gaping hole on the left. Freddie had a wonderful season for us last year and this wasn't necessarily a priority for us before the injury.
"But Nicky Shorey is more than a back-up. He's a quality player on the ball and is up for the challenge."
O'Neill's efforts to bolster the squad for the season ahead will continue and he concluded: "Between now and August 31 we need a squad capable of handling all the games ahead."