Michael was an inspiration in last season's fight to avoid the drop and he has rejoined the Royals with the same task ahead.
Manager Richard Sneekes said "This is a major boost for us and a massive signing. MIchael is a tremendous leader on the pitch and he will give us defensive steel that we have been missing".
Townsend will be available for selection in Saturday's game at home to Altrincham and the Royals hope to be able to announce more player news before the weekend.