The 22-year-old Irishman won the Super 2000 World Rally Championship last year to add to his WRC Academy title in 2011, but was left on the sidelines as both the ERC and WRC kicked off during January.
On Friday, however, Peugeot confirmed that Breen would contest eight ERC rounds in a 207 S2000run by the French Sainteloc Racing squad as well as developing its new R5-spec 208.
"Being a part of the Peugeot Rally Academy is a dream come true for me," Breen wrote on his Twitter page.
"And a massive thank you to Peugeot Sport for putting their trust in me."
Jeremi Ancian and Stephane Lefebvre, the top two finishers in the French Volant one-make series for 207s last year, are the other two drivers that have been signed by Peugeot.
Ancian will contest six ERC events in an S2000-spec 207 while Lefebvre will drive a 208 R2 on four rounds of the series.
Peugeot Sport team principal Bruno Famin said: "I am confident that Craig will confirm all the good things that have been said about him in this year's ERC, and I can't wait to see how our winners will fare alongside him.
"There is no pressure on them to achieve results. It's all about accumulating experience for these young drivers; we're not fighting for the championship."
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