The 42-year-old, who spent six years as a player in the Premier League from the mid-90s, has a remit to advise the new board of directors at Elland Road on first-team matters, the club have confirmed.
A brief club statement read: "The club are delighted to announce that Benito Carbone has joined the club in a consultant position and will deal with technical and football operations.
"The former Aston Villa, Sheffield Wednesday, Bradford City, Derby County and Middlesbrough midfielder will be involved with all football matters, including both the first team and the academy."
Leeds owner Massimo Cellino cast doubt on the future of Brian McDermott in an interview with ITV's Calendar on Wednesday when he questioned the manager's decision to take a holiday.
McDermott is understood to have taken a break after attending the League Managers Association's awards dinner in London on Monday night.
Carbone retired as a player at Pavia in 2010, but remained at the Italian club as youth-team coach.
The former Torino, Napoli and Inter Milan midfielder became head coach at Serie B club Varese in June 2011, but was sacked four months later.
Carbone took on a similar role at Italian lower league club Saint-Christophe Vallee d'Aoste in 2012 before quitting and has since made no secret of his desire to pursue a managerial career in England.
He was linked with the vacant manager's job at Sheffield Wednesday before the permanent appointment of Stuart Gray in December and last month Cellino announced Carbone was joining the youth set-up at Leeds.
Meanwhile, the Football League has confirmed it will send representatives to meet with Leeds officials next week in a bid to ascertain whether the closure of their Thorp Arch training complex will have any impact on the club's youth academy.
Cellino, whose deal to buy 75 per cent of the club's shares was completed on April 8, temporarily closed the club's Thorp Arch training complex on Friday in a bid to ease running costs.
A spokesman for the Football League said it was not launching an investigation into the closure but "was meeting with the club to discuss what implications it might have on the youth development programme."
The club's accounts announced last month for 2012-13 showed a loss of £9.5million for the year and Cellino, who has described his first weeks in charge as "unbelievable, impossible", said daily running costs were "well over £100,000".
It is understood the club is losing more than £1million a month and, following the closure of Thorp Arch until pre-season training, it is understood the formal process of staff redundancies began on Wednesday afternoon.