West Ham had shown an interest in the former England man, and had held talks with the left-back after Aston Villa told him he could leave.
The 31-year-old has not featured under Paul Lambert and spent time on loan at Bolton earlier this season.
A number of clubs have shown an interest and he looked set for a switch to West Ham - who need cover at left-back.
"Stephen we thought was a go-er, but another club in the Championship made him a more long-term offer which I think he has accepted, so I think he has decided to take that," said Hammers boss Sam Allardyce.
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