Bennett, 34 has joined from arch rivals Leeds United for a fee of £100,000 and will be insalled as understudy to Republic of Ireland international Paddy Kenny.
He signed for the Whites in July 2005 but only made just four appearances with Neil Sullivan as favourite between the posts.
The former Newcastle man almost signed for the Blades in 1998 when a swap deal involving Alan Kelly was eventually plugged, but in December 2004 owing to injuries Bennett played five times on a brief loan spell.
United could also sign another goalkeeper, former Nottingham Forest and Norwich City keeper Darren Ward is currently on trial and could do well enough to earn a contract.
Meanwhile Mansfield Town have signed former Aston Villa and Sheffield United striker Michael Boulding after being released by Rotherham United.