Town Chief executive Derek Bowden said: "It was always our intention to sign Jon on a permanent deal after we had agreed a fee with Sheffield United.
"But to avoid trying to rush things through at the last minute, with Jon having to race down here from Sheffield on deadline day, we agreed the loan. That gave us the proper time to discuss personal terms which have now been agreed."
Stead said he had no qualms on joining Ipswich and it was an easy decision to make. He commented: "It's been a fantastic weekend, what with scoring, getting the three points and finalising my move here.
"It was an easy decision to make, joining the club, but because it happened so near the transfer deadline day it made sense to make it a loan move initially.
"I didn't want to rush into anything without first looking around the facilities and spending some time on the training field, but my mind was made up straight away that I wanted to come here. Things have progressed quickly from when I first arrived and we sorted out personal terms last week.
"It's just been a case of waiting for the paperwork to be completed at both ends. It's my ambition to get back to the Premier League and one look around the dressing room here tells me I'm at the right club to try and achieve that."
Stead has got off to the best possible start after scoring his first goal for Town in the 2:0 win over Reading on Saturday.