Telfer, 36, has a wealth of experience having made his Football League debut for Luton Town during the 1990-91 campaign.
He made 149 appearances for Southampton after also starring for Coventry City before signing for Celtic just over three years ago.
Telfer spent last season with Bournemouth but agreed to leave the club in December 2007 to help their financial problems.
He will be eligible to make his debut in Saturday's season opener against Scunthorpe at Glanford Park.