The Welshman was confirmed as the club's new assistant manager in May 2018.
The move saw Davies reunite with Saddlers boss Dean Keates, who he worked alongside at his hometown club Wrexham.
He spent 25 years at the Racecourse Ground, starting out as a schoolboy and being offered a scholarship at 16.
He turned his hand to coaching and held roles as Youth Team Coach and Centre of Excellence Manager before being promoted to Keates’ number two in October 2016.
Under the pair’s guidance, Wrexham lost only six of 37 league matches this season, conceding a league-low 28 goals and keeping a club-record 20 clean sheets.
Following Keates' departure to the Saddlers in March, Davies was placed in charge of the Dragons until the end of the 2017/18 season.