Preston, 27, initially joined the Avenue on loan in November 2022.
The striker went on to score four goals in 12 appearances for the Green Army.
A former Blackburn Rovers youth player, he has previously had spells at Guiseley, FC Halifax Town, Gateshead, and Boston United, as well as a spell with Ayr United where he helped them to secure promotion during the 2015/16 season.
Preston will combine his time on the pitch with his off-field coaching duties with the academy.
On his new deal with the club, Preston said: "I’ve been speaking to the club and the management since the start of the off-season, and in the end, it was the best fit for me.
"I think mainly the way they treated me with my injury last season, and how they looked after me [was an important factor for staying at the club]. I enjoyed my football here, and it's a bit of a long-term opportunity for me at the club, so I’m looking forward to that."
Photo credit: Spennymoor Town