The 21-year-old has come through the ranks at Sheffield Wednesday, having joined the Owls as an eight-year-old, but was released by the club having made just two first team appearances, including in a 2-0 EFL Cup defeat at Fulham last September.
He then played in a Papa John’s Trophy win over Harrogate Town following his return to Darren Moore’s side after the spell with Gainsborough.
He also featured in the matchday squad for the Owls’ first team several times last season.
But despite now being a free agent, he’d impressed on loan under former boss Tom Shaw’s tutelage with Gainsborough and now new joint-managers Neal Bishop and Damon Parkinson have succeeded in luring him back despite offers of full-time football from elsewhere.
Waldock told the club’s official website: "I'm delighted to sign for Gainsborough Trinity. I know Damo and Bish really well, and I am excited to get started.
"They made me feel really important, that I was one of their main targets, so now I can't wait to get back in front of the fans again as I really enjoyed it here last season."
Waldock played ten games for Trinity during his loan spell, losing only once, with his matches including wins against Lancaster City and Coalville in the FA Trophy as well as a draw at home to eventual champions Buxton.
He added: "I will be looking to add goals and become even more of a box to box midfielder this season. I am very demanding of my team mates, I like to get the ball down and play and help the team to play.
”I want to help the team be very front foot forward - and really get the fans excited."
Bishop was delighted to have secured the signing of the promising midfielder.
He said: "I am delighted to get Liam on board. As a first signing I think it makes a massive statement.
"The fact he has turned down clubs from much higher up the pyramid in England and Scotland is massive for us.
"He thrived in this environment and he is someone we feel can develop further. He will be a big asset for us going forward."