The Israel international midfielder, who spent two years with the Hammers between 2005 and 2007, announced the move via his Twitter account.
"After a long and busy day I can say I had 3 offers from PL clubs..but not from Liverpool or Arsenal like some reports," wrote the 32-year-old.
"But I`m very happy to confirm that I will join on loan to West Ham! I can`t wait to start..great club."
Benayoun originally joined West Ham from Racing Santander on a four-year contract and played for them in the 2006 FA Cup final.
He caused some controversy, though, when he allegedly turned his back on an agreement to sign a new deal in order to move to Liverpool.
He spent three years at Anfield before moving to Chelsea in 2010, with the London club then loaning him to Arsenal last summer.
And, with opportunities limited at Stamford Bridge, the Blues have decided to release him again.