Edwards' status as a free agent lasted less than a fortnight after the Welsh Rugby Union acted this weekend to keep him out of the clutches of England for a second time.
The WRU concluded a deal that will see the former Great Britain rugby league star remain as Wales defence coach for at least another four years.
Edwards will be free to work for a club side in much the same way as he did before quitting Wasps almost two weeks ago, though not on a full-time basis.
The 45-year-old is already in talks with a Premiership club and will also be encouraged to work with Welsh Premiership sides, something that seemingly scuppers' Cardiff Blues hopes of making him their part-time defence coach.
WRU chief executive Roger Lewis said: "Under the terms of the contract, Shaun will be released one day a week, save Test match weeks, to work with an English Premiership club.
"I have also negotiated the opportunity for Shaun to work at times with Welsh Premiership clubs, which is particularly exciting for this level of our game."
Edwards' new Wales contract ended any chance of the 45-year-old joining England's coaching team in the build-up to the 2015 World Cup.
He had been out of work since standing down as Wasps head coach this month, with his previous Wales deal expiring at the end of the World Cup last month.
He was heavily linked with a role with England, with Martin Johnson's future as manager in some doubt following the side's dismal showing on and off the field in New Zealand.
But if the crisis-ridden Rugby Football Union were thinking about appointing Edwards to any position on their coaching staff, they have missed out again, having also failed to prise him from Wales three-and-a-half-years ago.
Lewis added: "We have an outstanding team of coaches and backroom staff working under WRU head coach Warren Gatland and Shaun's role as defence coach within that team is something quite unique.
"Talks began informally and discreetly in New Zealand with Shaun, and have continued over the past two weeks.
"I am particularly pleased to add that, in addition to his extended senior national team duties under Warren, Shaun will also be working with WRU head of rugby Joe Lydon within the WRU National Academy.
"Shaun will work with the Wales Under-20s, 18s and 16s. This is part of our strategy to ensure our coaches have influence over our elite players early in their development.
"Our structures are in place both on and off the field to take us up to and beyond the Rugby World Cup in 2015, all underpinned by sound financial management.
"The Welsh rugby public, who have been so loyal to us, all can look forward to the next four years with great anticipation."