The former Aston Villa and Tottenham manager was appointed on Thursday afternoon
Tim Sherwood is back in football after he was appointed director of football at League One side Swindon Town.
Sherwood was sacked by Aston Villa in October 2015 and chairman Lee Power told the BBC that it was "one of the biggest appointments" the club had ever made.
"We're still a bit shocked that we've managed to persuade Tim to take it on," he said. "We're very mindful not to use the title 'manager' - it's not a demotion for Luke Williams. He'll be head coach still. Tim will be running training alongside (Luke).
"Everyone knows Tim has been a friend of mine for 25 years. So there won't be a contract. It's a special relationship that we've had for a very long time - he definitely isn't coming for the money.
"Tim has had opportunities to work for two Championship clubs this year, that he has turned down."
Williams will remain in his role at the club after only signing a five-year deal with the club in March and Sherwood expressed his delight at the appointment.
"I like this club. I've got a soft spot for it. This is a good opportunity for me to get back onto the training field.
"I started this morning. I'll be in the dressing room, I'll be talking to the boys and giving them some words of wisdom."
Sherwood was a team-mate of Power at Norwich City in the early 1990s. The 47-year-old won the Premier League with Blackburn Rovers back in 1995 alongside Alan Shearer.