Tranmere boss Ronnie Moore told the club website "Peter has vast experience as a player. He learnt from some of the best managers in this country, in Ron Atkinson, Graham Taylor, Trevor Francis and Dave Bassett.
"His coaching ability is second to none and I know him really well. He is a great addition to our backroom staff.
"He will have respect from the players and I think he will do a wonderful job for the club."