Gardner formally takes up the position in July, when his contract expires and he will retire from playing.
Until then Gardner will continue to assist Pep Clotet in his current capacity as Player/Coach.
Gardner says he is excited about the 'new chapter' in his career and will have no regrets about hanging up his boots.
"It's exciting and a real honour," said Gardner, who turned 33 on Monday.
"When you are a kid you dream about becoming a footballer. To play for the team you support, in the Premier League, win a cup, to finish your footballing career here . . . and then to start a new chapter as a coach - I couldn't have wished for more.
"To be given this opportunity is a privilege and this Club is a great place to be."
This appointment is the latest development in the Club’s on-going and long-term plan to evolve the coaching and support staff structure and develop the footballing ethos as initiated during the summer.
"People say 'you're only 33, you can continue to play at a good standard'," Gardner continued. "Is that what I want now? I want to be part of this Club.
"You can see over the past four or five months what the Club wants to do - what the Club is doing.
"The owners and the Board; everyone is putting a lot of positives in.
"The way we are training and preparing with Pep, Paco Herrera, Xavi Calm, Darryl Flahavan and the staff . . . everyone is on board.
"It is a great place to be around. Everyone is buzzing every single day. The players are smiling, they are happy - you can see that on the pitch as well.
"I have enjoyed my career, every bit of it.
"Now I want the players to enjoy theirs. I will give every single thing I can to help them do that and to help them improve and get this Club back where we should be."
Gardner has made 125 appearances for Blues over two spells, scoring 16 times.
A boyhood Blues fan, he lifted the Carling Cup with the Club in 2011.
He has played just once this season, captaining a young side in the Carabao Cup at Portsmouth.