The move could make way for Posh's first-choice shot stopper Joe Lewis to leave London Road.
The 23-year-old is on the transfer list and is looking to join a bigger club, but Ferguson has insisted Jones will provide back-up to the former England Under-21 star.
"He will provide competition to Joe Lewis which I think he needs," he said.
"The signing does not mean that Joe will be leaving, I just feel he needs a bit of competition."
Regarding the signing of Ball, chairman Barry Fry told the club website: "David came down to the ground earlier in the week and met with the management and we are delighted that it has been completed, it has taken a little while.
"The chairman Darragh MacAnthony has backed the manager once again with four signings in the transfer window, Tom Kennedy, Grant Basey, Paul Jones and David Ball.
"The players that have been brought in fit our criteria, they are young, hungry and eager to learn and we are delighted to have them here at the football club."
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