He began his playing career with his hometown club Coventry City before spells with Bradford City, Halifax Town and Hull City before joining Carlisle in 2006 following a spell as youth-team coach at Leeds United.
Allen added: "Everything Greg has put in place over the last month, both on and off the pitch, has demonstrated that he is the right person for the job.
"We looked at how well Greg did in his first spell as caretaker-manager at the club last season and at the changes he has been making this time and his whole attitude to the job.
"We firmly believe that Greg now deserves his first chance at being a first-team manager and we are delighted to give him that opportunity at Carlisle United as from today."
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