Campbell, 35, who had been training with Arsenal after a short spell with League Two Notts County ended abruptly in September after one game, played in the Gunners 4-2 reserve win over West Ham at Upton Park on Tuesday.
"I'm ecstatic really to be back at Arsenal, and I have worked bloody hard to get there," Campbell told The Independent after the match.
"I hope to sign for Arsenal until the end of the season. There are still a few technicalities to iron out, but it's fantastic, great, marvellous. The old enthusiasm is back. I've got to tell you it seems as though I have never been away."
Campbell started the reserve match against West Ham before being substituted at half-time with Arsenal leading 2-0.
Should he join, it would be the first time Arsenal manager Arsene Wenger has re-signed a player during his 13 years in charge.
"Arsene has been an inspiration," Campbell said.
"He has watched me closely after letting me train at Arsenal for nearly two months now.
"He's not stupid, he wouldn't have taken me back if he didn't like what he had seen, and I have worked and worked. I do believe I can contribute. I really have my confidence and fitness back and believe I can make a big, big contribution."
Campbell is likely to be reserve for Arsenal's first choice central defenders William Gallas and Thomas Vermaelen but his arrival is likely to see Swiss defender Phillipe Senderos, who is keen for first-team football ahead of the World Cup, depart.
JOINED FROM ARCH RIVALS
The moved would complete a remarkable turnaround for Campbell whose career looked over after his departure from Notts County but he could soon look forward to being part of third place Arsenal's Premier League and Champions League title challenges.
He joined Arsenal on a free transfer from arch-rivals Tottenham Hotspur in 2001 and won two Premier League titles and three FA Cups in his five years at Arsenal.
He was also part of the team that won the FA Cup and League double in 2002 and the side that was undefeated during the 2003-04 league season.
However, Campbell's time at Arsenal ended disappointingly through injuries and a loss of form.
He upset many Arsenal fans in February 2006 after walking out at halftime following a poor display as Arsenal lost 3-2 to West Ham.
He returned to the side after an extended absence but his final match for Arsenal ended in an heartbreaking 2-1 final defeat to Barcelona in the 2006 Champions League final despite his opening goal.
He then moved to Portsmouth where he regained his form and helped them lift the FA Cup in 2008.
He won the last of his 73 caps in November 2007 when England lost to Croatia at Wembley and were eliminated from Euro 2008.
