The 29-year-old has had three seasons at the men of Gwent, whilst also making appearances for premiership sides Newport RFC and Cross Keys.
Waters made 17 appearances for the Dragons during his time from 2011-2014.
Newport Gwent Dragons director of rugby, Lyn Jones commented, "I am delighted that Darren has secured regular rugby at London Welsh. He has had three difficult seasons with us with certain injuries resulting in him not being able to show his true potential.
"We wish Darren well and I hope that he will now be able to show both London Welsh and England rugby how capable he can be."
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