Davies has taken charge until the end of the season with Scarlets bottom of the United Rugby Championship (URC) and winless in Europe.
He has been appointed above head coach Dwayne Peel, who played under Davies as scrum-half for both club and country, with rugby performance director Leigh Jones leaving the club.
Peel, who led Scarlets to the URC play-offs last season, has survived festive derby defeats by Ospreys and Dragons and then a home Champions Cup loss to Pau.
But he is no longer the man in charge and despite holding the top role since returning from Ulster as head coach in 2021, he now reports to Davies.
“It’s probably not great for him [Peel] and they [the coaches] probably didn’t want to see me in here on Tuesday, and I understand that,” said Davies.
“But he is a passionate Scarlet. He knows that a lot of the work he has had to do has taken him away from where he needs to be.
“We have taken that pressure away and he’s now allowed to do what he is really good at.”
