Following the acquisition of Cyprus defender Jason Demetriou, Etheridge, 25, fills the gap left by Richard O'Donnell's move to Wigan Athletic.
The ex-Chelsea trainee, who has made just 20 Football League appearances, was released by Charlton in May.
"We had a number of good options but Neil stood out," said boss Dean Smith.
"He ticks all the boxes in age, room for development and experience at this level and above," said Smith.
He's an extremely driven young man who wants to be successful. These are the characteristics we're looking for.
"Neil will compete with Craig MacGillivray for a first-team place. They will both push each other on, exactly the kind of competition that we want."
Etheridge, who began his professional career at Fulham, added: "The faith that the gaffer and Neil Cutler (Walsall goalkeeping coach) have shown in me means a lot. Now is the time to get my head down and work hard.
"I have gained plenty of international experience in front of big crowds, but I've not played as many league games as I'd have liked. I intend to rectify that here."
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The university's students union is behind the scheme, which has been running across a number of its campuses.
Research has suggested that interacting with dogs can help reduce stress and help improve concentration levels.
Hundreds of UU students have spent time petting and playing with the dogs.
On Wednesday, four dogs spent the afternoon at the students union at Jordanstown.
The union's officer for student affairs, Hannah Rooney, said that students faced many pressures at exam time, and the dogs helped to reduce that.
"Students really enjoy the dogs, and it's good fun for the dogs themselves," she said.
"It a bit of distraction as it's something we don't get on campus every day, you don't have dogs all the time.
"So it's a way to relieve stress and get out of that mindset students are in with exams coming up.
"We've run this at our Magee and Coleraine campuses and the feedback from students has been great.
"They'd want a puppy room all the time if it was possible."
The dogs were provided by volunteers from Northern Ireland Assistance Dogs.
They train and provide medical alert dogs to adults with medical conditions, such as diabetes.
Danielle O'Neill was one student who was revising for exams but called in to spend time with them.
"Being with the dogs just relaxes you and gives you five minutes to put your mind onto something else other than exams and studying," she said.
"It gives your hand a bit of a break from writing too!"
Other UK universities, including Bristol, Nottingham, Aberdeen and Central Lancashire have also offered similar schemes in recent years.
League One side Walsall have made their second international signing in 24 hours by bringing in Philippines keeper Neil Etheridge on a two-year deal.
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Dogs have been bringing relaxation and calmness to students revising for sitting exams at Ulster University (UU).