The 18-year-old full-back has signed a two-and-a-half year deal, plus a further year's option in the club's favour.
Baggies chief Dan Ashworth told the WBA website: "We've offered James this new deal for the rapid progress he's made during the past five months.
"It's been well documented that he joined us as a young boy and then left for another club, where he lost his way a little.
"He's worked really hard, does extra training on afternoons and he has seen the fruits of his labour with Robbie drafting him into the first team.
"He is well thought of here and if he stays level-headed, I believe he has got a bright future at this club."