The 34 year old, a former Bradford City, Gainsborough Trinity and Sunderland defender replaces Tommy Cassidy who left the club earlier in the week.
Williams, also a registered player at the club, is confident that he can turn the Seasiders' fortunes around, "We've got three difficult games coming up in the next few weeks, against really good opposition, but I do feel we can turn things around given time."
"We've got 28 games left, the main priority is to stay in the league. I have ambitions to go further than that, so obviously I want to do well and continue doing the job next season, but results are key."
David Campbell will assist Williams in his new role as player-coach.
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