Foster, who played 17 times and scored once for the Imps early in his professional career during the 2005/06 season, returns to Sincil Bank having appeared during pre-season whilst on trial.
The former Sheffield Wednesday trainee, who had loan spells with Scarborough and Alfreton Town prior to joining City in the summer of 2005, appeared for York City and Stalybridge Celtic before becoming a first team regular at Oxford United.
He appeared over 100 times for the Us and played once for the England C international team before joining Mansfield Town and then Stevenage, making his debut for the latter in their first ever Football League fixture in 2010.
Joining Rotherham United a year later, Foster's solitary season with the Millers was cut short due to a cruciate ligament injury and following his release he penned non-contract forms with Matlock Town in a bid to return to full fitness.
Once his fitness had restored, the 27-year-old linked up with former Stevenage boss Graham Westley at League One Preston North End and went on to make eight appearances for the club before being released by their new manager Simon Grayson at the end of last season.
His contract with City will run until the summer of 2014 and he's taken the number 27 squad shirt.