The Ireland international, who returned to Ireland in November to deal with a family matter, has been training with Shamrock Rovers in the last few weeks.
Blues manager Lee Clark is pleased to have the 30-year-old back and admits he is satisfied with the player's physical condition.
"It is great that Keith has now returned to the club," the Birmingham boss said.
"He underwent a full fitness assessment last week and I'm delighted to say that he is in great shape so, within a few weeks of being back in full training and some reserve team action, he should be ready."
Fahey said: "I want to thank the club for giving me the necessary time and support to deal with what was a genuinely personal family matter, I appreciate it greatly.
"Over the last few weeks I have been doing the equivalent of pre-season training with my local club Shamrock Rovers and I would like to thank that club's manager, Trevor Crolly, for allowing me to do so."
Meanwhile. Darren Ambrose will make his long-awaited return to action in an U21 match against Leicester on Monday.
The midfielder has also been out of action since November after sustaining a knee injury.