Connell, 34, returns to the club where he played a key part in their 2012 FA Vase final triumph. He left for South Shields in 2016, making 140 appearances for the Mariners, before spending last season on loan at Darlington.
Manager Chris Swailes said: "It's great to have Liam at the club. I know him well, having played with him here at Dunston.
"He adds know how, experience and will help to strengthen the defence. We're always looking to strengthen and it's great to have him back, he'll be a massive asset for us this season.”
Meanwhile, the club have confirmed the departure of ‘keeper Karl Drysden, an FA Vase winner himself with Morpeth Town, after two seasons.