United boss Kevin Blackwell said he was looking for a similar character to lead the side and Butler, 31, has played more than 500 first team games and his experience made him the number one candidate for the job.
Butler has captained his previous clubs and Blackwell says he has a vital role to play. Blackwell said in the YEP: "Paul has shown leadership qualities at every club he's been at. He's captained Wolves, Sunderland and Bury and he's a great leader of men.
"One of the reasons I was so keen to bring him was because of his experience and the fact that he sets a good example to others. He's already shown those qualities in the six days we've been working and I think he is a fitting choice to take over from Dom."