Connor took over as caretaker manager of the Midlands club after the sacking of Mick McCarthy earlier this month following a run of poor results. He had been assistant to McCarthy.
Since then several high-profile names have been linked with the coaching job but Wolves have been unable to reach a final agreement with any of them and instead have asked Connor to lead the battle against relegation from the Premier League.
Connor will be in charge for the remaining 13 games in the season starting with the league match at Newcastle on Saturday.
Wolves are currently third from bottom of the Premier League, just two points clear of bottom side Wigan
Former Leeds, Brighton and Portsmouth striker Connor has been at the club for 13 years and served under four different managers.
Wolves chairman Steve Morgan said: "Since we made the difficult decision to part company with Mick, we have been through a diligent process of assessing potential candidates.
"Having spoken to a number of people, we have drawn that process to a close and myself and the board are unanimous that Terry is the right man to lead the club for the remainder of the season.
"This is a decisive step, which creates certainty, and the players are fully behind it.
"As a club, whether that be staff or supporters, we now all need to unite behind Terry and the players and secure as many points as possible over the next 13 games."
Source: AFP
Source: AFP