The 42-year-old had been out of work since being sacked by Bournemouth in August, having voiced his unhappiness regarding the club’s approach in the transfer market.
Parker’s new job with the three-time Belgian champions will see him get an opportunity to manage in the Champions League after they progressed to the knockout stages, where they are due to face Benfica when the competitions resumes in February.
However, they are off the pace in the Jupiler Pro League, 12 points behind leaders Genk in fourth after a 1-1 Boxing Day draw with OH Louvain.
That, coming on the back of a poor 4-1 home defeat to St Truiden in the Belgian Cup, led to the club dismissing former Stoke and West Brom midfielder Carl Hoefkens only six months after he stepped up from his role as assistant when Alfred Schreuder left to replace Erik ten Hag at Ajax.
Prior to his 14 months at Bournemouth, Parker had also spent just over two years as manager of Fulham.
During his playing days he represented England 18 times, while playing for Charlton, a short loan at Norwich, Chelsea, Newcastle, West Ham, Spurs and Fulham.
Additional reporting by PA