The Wolves midfielder had already spent a month on loan at The Walkers Stadium but that deal ended after their FA Cup tie against Crystal Palace last weekend.
However, Davies has now signed for a second month on loan with the League One promotion hopefuls.
"Mark has done very well for us since he joined and I am delighted to have been able to secure his services until the end of the month," Foxes boss Nigel Pearson told the official Leicester City website.