Britton fills the vacancy left by Claude Makelele, who departed Swansea last week to become manager of Belgian club KAS Eupen.
The 35-year-old midfielder will continue playing but has given up the captaincy at the Liberty Stadium.
“It is the beginning of a new chapter in his career,” head coach Paul Clement told the official Swansea website.
“I feel he is the perfect person for the role at this time.
“He is still very much in my plans as a player, but now we can tap into his knowledge as a coach too. He has a lot to give in that respect.
“He now sits in on all management meetings and on the days where he is not training, he will be part of the coaching set-up.
“Similarly, on a match day, if he’s in the squad then his focus is on playing.
“If not, then he will be in the dugout as part of the coaching staff.”
Britton — who has played 525 games in two spells at Swansea — will work under Clement and alongside Nigel Gibbs, Karl Halabi and Tony Roberts as a player-assistant coach.
Swansea will now appoint a new captain, with Argentina defender Federico Fernandez having worn the armband recently when Britton has been missing through injury.
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