Tilio's move to Scottish powerhouse Celtic on a five-year deal in June 2023 has so far proved disastrous for the 22-year-old.
A pre-season quad injury was a nightmare start, while Tilio quickly fell out of manager Brendan Rodgers' plans and rejoined City on a short-term loan in January.
But repeated hamstring injuries limited the tricky winger to just four appearances and a single goal.
Tilio has signed with City on loan for the entire 2024-25 season in a bid to reinvigorate his career and return to the Socceroos fold.
"Delighted to re-sign and hopefully have a positive season," he said.
"Last season didn't go to plan - (I) had a few injuries throughout the whole season ... (and) ended up being out for about eight months out of the last 12.
"So it wasn't ideal. It was tough.
"But now I've put myself in a good spot and I just want to get cracking for pre-season and see what I can do for this season at City."
Tilio said he was unconcerned whether he played on the wing or centrally as City attempt to improve on last season's elimination-final exit.
"I'm going to do everything I can to help the team win this season and get myself back out there playing," he said.
"It's a massive year ... I can't wait.
"We want to go on and try to win everything we can this season."
