He arrives as a replacement for 22-year-old Sanderson, who has made 16 appearances for Blues this term.

Sanderson was on a season's loan but Wolves have activated a release clause.

Wanderers also ended Ryan Giles' loan spell at Cardiff on Monday and have injuries mounting as well as players leaving for the Africa Cup of Nations.

Sanderson, who has previously enjoyed loan stints with Sunderland and Cardiff, will be available for Wolves' FA Cup third-round tie at home to Sheffield United on Saturday.

Wolves technical director Scott Sellars said: "For Dion to be playing week in, week out at Championship level has been fantastic for his development.

"With [Romain] Saiss going to Afcon and [Willy] Boly and [Yerson] Mosquera injured, this gives us an opportunity to bolster the squad."

Mengi, meanwhile, arrives at Birmingham after a spell at Derby last season and came on as a substitute in Manchester United's Champions League group game against Young Boys in December.

"As soon as I heard about Blues I was straight on the phone to [Tahith] Chongy and he told me it is great, the lads are great. I am going to enjoy it," he told Birmingham's club website.