Cast adrift at the foot of the division, the Quakers job has already seen off Colin Todd and Steve Staunton during the 2009/10 campaign.
Davey returns to management after leaving Barnsley earlier in the campaign.
Chairman Raj Singh said: "He's bought into what we're trying to achieve here and he's excited by the opportunity.
"Simon has had a thorough grounding and he's extremely hungry to succeed."