The 21-year-old, who had also been a target for Colchester United and Leeds United, has penned a deal running until the summer of 2011 with the Sky Blues.
Boss Iain Dowie told the club's official website: "We've been looking at Daniel for a while now. He has continually impressed, so I'm delighted to bring him to the club.
"He is a player who is very comfortable on the ball, possesses decent pace and can hit a great range of passing.
"He has played a lot of games for a 21-year-old and is certainly one for the future."