Michael Stewart has won three full Scotland caps

The 23-year-old has been at Old Trafford for seven years but is not in manager Sir Alex Ferguson's plans and has agreed a pay cut to make the move.

"Knowing the financial restrictions at Hearts, I took the cut," Stewart told the Edinburgh club's website.

"I am extremely happy to be home with family and friends at the club I supported as a kid."

Hearts' only financial commitment to the deal will be bonus payments.

Stewart, who has made three appearances for Scotland, joined Rangers at their summer training camp in Austria but failed to win a move to Ibrox.

He spent much of last season on loan at Nottingham Forest but returned earlier than planned after falling out with Forest boss Joe Kinnear.

He has also spent time on loan at Belgian side Royal Antwerp.

"The last couple of years have been bitterly disappointing," Stewart continued.

"It affects the way you live your life. It puts a lot of strain on it. I just want to play and enjoy football."