The news that the versatile defender is bolstering Lee Clark's Blues squad follows the announcement that Reds centre-back Tom Thorpe is making the same move. Both will hope to make their debut in the Championship this weekend at home to Derby County.
Blackett, 19, was part of United's FA Youth Cup-winning squad in 2011 and performed on the club's pre-season tour a year later. Earlier this season, he played for Blackpool under former Reds midfielder Paul Ince, who has since been sacked from his post as manager. Blackett made five appearances for the Seasiders, including a game against Birmingham - for whom his United team-mate Jesse Lingard scored in a 1-1 draw.
Lingard has now returned to the Reds, but Thorpe and Blackett will maintain United's links with Birmingham until the end of the campaign.