Ireland joined Stoke on a season-long loan from Aston Villa earlier in the season, and following that he made no secret of his desire to make the move something more long-term.
In signing Ireland permanently, Hughes has also been able to bring in Manchester City striker John Guidetti on loan for the remainder of the campaign.
Midfielder Ireland has so far performed admirably at the Britannia Stadium, making 16 appearances under Hughes - including nine starts - and scoring three goals.
It is the second time in their careers Ireland and Hughes have joined forces, as the 27-year-old played under the Welshman for 18 months from June 2008 to December 2009 at Manchester City.
Speaking to the official club website, Hughes said: "Stephen is a talented footballer and has shown what he's capable of since he joined us.
"We're delighted to have made his switch a permanent arrangement as it also gives us the opportunity to bring in another player on loan."
That player is Sweden Under-21 international Guidetti, who joined City at the age of 16 but whose progress since has been hampered by illness and injuries.
It is Guidetti's fourth loan spell away from City, playing previously for Swedish side Brommapojkarna, Burnley, and then Feyenoord in 2011-12 with whom he scored 20 goals in 23 league appearances.
But with the likes of Sergio Aguero, Alvaro Negredo, Edin Dzeko and Stevan Jovetic ahead of him in the pecking order at the Etihad Stadium, Guidetti has been unable to make any impression.
The 21-year-old has now been handed by Hughes the Barclays Premier League opportunity he has long craved.