Smith had been head of youth development at Walsall since 2009
Dean Smith has been appointed Walsall manager until the end of the season following an encouraging three games in charge as caretaker boss.
After taking over from Chris Hutchings following his dismissal on 3 January, Smith, 39, guided Walsall to valuable draws at Tranmere and Bristol Rovers.
The Saddlers then lost 4-2 at home to high-flying Huddersfield last Saturday.
Smith told BBC WM: "I know the position we are in and what we need to do, I'm looking forward to the fight."
He added: "A lot of people have said congratulations, I'd rather get good lucks then congratulations, because we need some luck along the way.
"I've really enjoyed the three games so far and I'm looking forward to going on from there and producing the kind of performances that we put in against Huddersfield - but with the results."
West Bromwich-born Smith, who had been the club's head of youth after returning to Bescot following four years as assistant to Martin Ling at Orient, beat off 90 other applicants.
He faces a tall order, with Walsall currently propping up the League One table, seven points and a healthy goal difference away from safety.
But chief executive Stefan Gamble says that the club are in good hands under the former Hereford, Leyton Orient, Sheffield Wednesday and Port Vale defender, who started his career with Walsall at Fellows Park way back in 1989.
"We are really pleased to have Dean on board on a full-time basis," said Gamble.
"The rest of the board and I have been very impressed with how he has conducted himself since taking over the first-team reins.
"He has all the relevant qualifications, including his Uefa Pro Licence, and fits the bill in terms of what we are looking for, a young, fresh, hungry coach.
"There were some excellent candidates but, as a board, we believe Dean's attributes reflect the modern and innovative approach to football management we are seeking.
"There are 22 games left this season and we have everything to play for.
"And funds are available to Dean should he wish to make changes to his squad during the January transfer window."
Hutchings and his assistant Martin O'Connor were sacked after successive heavy defeats by Notts County and Peterborough.
And former defender Smith's first job is to tighten up at the back, his Saddlers team having now conceded 16 goals in their last five games.
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