Collins, 20, started his career with the Exiles but moved to Molineux in 2016.
He has since enjoyed loan spells at Notts County, Tranmere and Maidstone but is now back with the League Two play-off hopefuls.
County boss Michael Flynn told Newport’s official website: “I have always kept an eye on Aaron and I feel I can get the best out of him.
“He’s talented and hungry, and after watching his performance on TV for Maidstone, it’s obvious to me that he’s ready.”
Collins added: “I’m delighted to come back to my hometown club. I can’t wait to get started and hopefully help the club move up the table.”