Williams was a free agent having left Saracens at the end of last season where he had only been for a few months in his second spell after cutting short a stint in Japan with Kubota Spears.
He has not played since injuring his knee for Wales in January in the Six Nations defeat to France in Paris, but Diamond says the full-back is good to go, as he closes in on a century of Wales caps, with him currently on 93.
“Liam’s 34 years of age, so we’ve got to look after him,” added Diamond.
“He’ll be like a tube of toothpaste, we just need to squeeze it gently to get the most out of him over the next 12 months.
“He’s not coming to play 30 games, he’s coming to play 15, 20 games for us and it’s not what he brings on the field, it’s what he brings around the whole environment.
“I like blokes like him. He’s got a great reputation, I met him on holiday in the summer and had a bit of a chat. He’s got through his injuries, he’s as fit as a butcher’s dog and he has a really good mental attitude.”