Earlier yesterday, Panesar was released from his Sussex contract for his drunken behaviour outside a Brighton nightclub on 5 August.
However, he wasted no time in agreeing a move to Essex, who confirmed on their official website that the 31-year-old will be available to play their remaining six LV= County Championship Division Two matches.
The move gives Panesar an opportunity to rebuild his shattered career as well as make a late case for selection for England’s tour to Australia later this year.
The spinner had been back-up to Graeme Swann in England’s Test ranks for the last couple of years.
But he has been overlooked in favour of Lancashire’s Simon Kerrigan for the conclusion of the Ashes series at the Kia Oval this week in light of recent events.
It was predicted he would return to Northamptonshire, with whom he started his career in 2001 before leaving for Sussex eight years later.
But his decision to sign for Essex means he will immediately face the recently-crowned Friends Life t20 champions in his first match with his new county today.
Essex coach Paul Grayson said yesterday: “We are delighted to welcome Monty to the club for the remainder of the season.
“He is a world-class spinner and we are confident that he will have a positive impact on the team.”
Panesar has much to do to get his career back on track, but started by expressing his regret at his actions that led to his release from Sussex.
In a statement, he said: “I apologise for letting the club, my colleagues and my fans down. I am determined to do whatever it takes to gain selection for England this winter. I want to become the best I can be.”
Panesar, whose wife Gursharan Rattan has reportedly filed for divorce, added: “I am grateful to Sussex for allowing me to be released from my contract for 2014 and 2015 in order to explore other opportunities to further develop my cricket. I want to give myself the best chance of playing all forms of the game at the highest level.
“I would like to thank Sussex for the opportunities, experiences and support I have enjoyed at the club since 2010, and my gratitude for the contribution Sussex have made in providing me with a platform to gain selection for England on three successive winter tours.
“I have endured a challenging time this year off the field, and my frustrations have sometimes got the better of me professionally.”
Panesar added that he was committed to self-improvement on and off the pitch. He said: “I have re-engaged with Neil Burns at London County Mentoring, to help to develop my cricket further.
“I feel that Neil, along with a trusted support structure in place around me, will help me put my personal and professional problems behind me and enable me to put all my energies and focus into the game and a new club.
“I believe that if I maintain the bowling progress I have made in recent weeks which enabled me to be selected for the Test squad at Old Trafford, I can fulfil my long-held ambition of becoming the best spin bowler in the world, over time.”
A statement from Sussex read: “Monty Panesar will be allowed to leave the club at the end of the 2013 season.
“The club’s investigation into the recent incident, which took place on Monday 5 August, has been concluded – and both parties have reached agreement.”