Butland, 18, was an important part of Mark Yates' side between October and December last year, keeping five clean sheets in 11 games and was shortlisted for the League Two Player of the Month award in November. The young 'keeper has since represented England at U21 level and has been on the Birmingham bench for FA Cup games against Wolverhampton Wanderers and Chelsea.
"I'm glad to be back because I loved my first spell here," Butland told the club's official website. "The players, the club and the fans were all great for me and it's all part of building my experience."
"I've kept an eye on all of Cheltenham's results and I've seen as many highlights as I could. I've also kept in touch with all the boys so it feels like I haven't been away."
"Boaz Myhill is doing very well for Birmingham right now so I can't just walk into the team. But hopefully, I can continue to prove myself in this half of the season so I'm ready for next year."
Birmingham cannot recall Butland until 28 days of his loan have elapsed.