Striker Hopper, 21, returns to the club where he scored four goals in 12 appearances during a loan spell between January and March last season.
He becomes the second of the trio of former Foxes players to find a new team after he was axed along with James Pearson and Adam Smith, who earlier on Friday signed for Northampton, this month.
Leicester terminated the contracts of Pearson, son of the club’s manager Nigel, as well as Smith and Hopper following an internal investigation into a leaked video of an orgy during a ‘goodwill tour’ of Thailand.
Nine days after the three players were released by the Premier League side.
Scunthorpe appear aware that signing Hopper is likely to draw criticism from some quarters and the League One club issued the following statement on their official website: “The club would like to make it clear that we are fully aware of the recent publicity surrounding the young striker and have put a considerable amount of thought into the decision to sign him.
“However, Tom is a player that we are very much aware of, having signed him on loan last season, and we feel that we know his true character, which was not represented by this regrettable incident.
“While we fully understand the position taken by Leicester City in this matter and we do not condone Tom’s actions, we have discussed the issue at length with the player and he has shown a great deal of remorse and a real willingness to rehabilitate himself. The player accepts fully that his actions were unacceptable and takes full responsibility.
“We understand that youngsters can make mistakes, but we are a club who believe in giving people a second chance when they have shown a genuine desire to make amends.
“The club hopes that our supporters understand our position on this matter and will allow Tom to do his talking on the pitch, in the knowledge that we will be working with the player closely to rebuild his reputation and ensure there is no repeat of his recent indiscretion.
“Neither the club officials nor the player will be making any further comment at this time.”