The defender's £3m switch to Wearside from Colchester two years ago failed to work out.

But he has been in demand after positive loan spells with Charlton Athletic and Sheffield United in the last season-and-a-half.

The 24-year-old was a key figure for the Blades last season, scoring the play-off semi-final winner against Preston to send Kevin Blackwell's men into a Wembley showdown with Burnley.

United planned to make a permanent move for the former England Under-20 international, but had to scrap the deal after losing the play-off final 1-0.

The Londoner will become the second player Wolves' ex-Sunderland boss Mick McCarthy has pinched from a potential move to Bramall Lane after Blades target Andrew Surman was captured from troubled Southampton yesterday.

McCarthy – who led Wolves to the Championship title last season, emulating his achievement on Wearside – has had a busy week in the transfer market.

He has also snapped up Reading and Republic of Ireland striker Kevin Doyle - reportedly a target for Sunderland - for a club-record £6.5m.

Halford arrived at the Stadium of Light as one of the highest-rated players in the Championship.

He always looked accomplished going forward, but became a liability defensively, and Roy Keane – who signed him from Colchester – quickly dropped him.

In only nine Sunderland appearances, Halford was twice sent off – including a dismissal in an embarrassing 3-0 Carling Cup loss to League One side Luton in August 2007 – and never won a game.

Halford quickly follows another Keane signing, Michael Chopra, out of the Stadium of Light. Chopra rejoined Cardiff City yesterday for £3m.

Scottish Premier League outfit Hibernian's interest in Anthony Stokes is said to be cooling because Sunderland want a fee for the Republic of Ireland striker, who cost them £2m from Arsenal in January 2007.

Reports from Edinburgh also say Stokes' £17,000-a-week wages are a major barrier to any reunion with new Hibs boss John Hughes, who had the forward on loan at Falkirk.

Sunderland return to pre-season training a week today and new manager Steve Bruce would like to add to his squad by then.

Meanwhile, Chile international forward Humberto Suazo has been the latest name linked with Sunderland. His club in Mexico, Monterrey, are said to want £5m.