"We've come a long way in the last few years, but Dean is the man to take us further.
"He is a very professional character who shares our ambitions.
"Our target is obviously Conference [Blue Square Premier] football, and we hope that is achievable as soon as possible."
Interviews for assistant coaching roles will be held in the coming weeks, with the new manager expected to target a candidate with local knowledge.
Holdsworth joined Newport in February 2007, staying until the end of the season as he scored three goals in five starts and helped the side to reach the FAW Premier Cup final.
He left to take his first managerial post at Ryman League side Redbridge, leading them to third in the table and only missing out on promotion via the play-offs after a penalty shoot-out defeat to Canvey Island.
Redbridge announced on Sunday that their manager was leaving them because he had moved to Worcester and the travelling was too much.
Holdsworth has also played for Watford, Brentford, Bolton, Coventry, Rushden, Havant & Waterlooville, Derby County, Weymouth and Cambridge United.
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