The left-back will stay with the League One side unti 30 May, 2021.
It will be the second temporary spell for Seddon at Wimbledon.
In January 2019 Seddon joined them on a loan to the season's end.
And he was remembered fondly by all as he was a key part of the side that went on a 12-game unbeaten run to secure their divisional status.
Seddon, 22, will link up with goalkeeper Connal Trueman, who completed his Standard Loan for the season with AFC Wimbledon in August.
The Dons are managed by Glyn Hodges and have drawn their opening two league matches. On Tuesday they defeated Brighton & Hove Albion Under-21s in the EFL Trophy.
Seddon enjoyed a successful loan at Portsmouth last season. He made 18 appearances, scoring once, and helped them to the League One Play-Offs.
Seddon has made five senior appearances for Blues and was an unused substitute last weekend at Swansea City.