Pallister, who left the north east club nine years ago for Manchester United, said: "I am still ambitious - I want to play at the top for another three years and help 'Boro to their first major trophy."

Pallister won his first England cap while at Middlesbrough

Pallister, 33, admitted he was surprised when Manchester United, who have signed Dutch defender Jaap Stam for £10m, let him go.

He said: " I had a year left on my contract and felt I had a good last season but that's the way of football. You are never sure what is round the corner.

"Once I knew I was leaving Manchester United, Middlesbrough were the club to join. The club is close to my heart. I have family and friends in the area."

Pallister's medals at Old Trafford include four championships, three FA Cups, the League Cup and the European Cup Winners' Cup.

'Vast experience'

He will join Paul Merson and Paul Gascoigne at the newly promoted premiership club, continuing a string of big money signings that in the past have included Juninho and Fabrizio Ravanelli.

Bryan Robson: Pallister 'has been a winner'

The Middlesbrough manager Bryan Robson said: "Pallister has vast experience. He has been a winner throughout his career and that is the type of player I want to bring to this club.

"I think we have a great replacement for Nigel Pearson. I was surprised when Manchester United allowed him to leave."

Middlesbrough also announced the signing of the former Crystal Palace star Dean Gordon for £900,000.

The 25-year-old utility player said: "I did not think twice when Bryan Robson came in for me. It was not a difficult decision.