The Blues also confirmed that fitness coach Jose Mario Rocha and chief opposition scout Daniel Sousa have left the club, the pair having been part of Andre Villas-Boas' coaching team.
Former Chelsea midfielder Newton spent almost a decade at Stamford Bridge and he and Di Matteo scored the goals that won the club the 1997 FA Cup.
The 40-year-old was also part of the League Cup and European Cup Winners' Cup sides the following year, and after his playing career was ended prematurely due to injury, he returned to Chelsea with a role in the academy.
He went on to become assistant manager under Di Matteo at both MK Dons and West Brom, leaving the Baggies when both were sacked last January.
Chelsea announced that Steve Holland would remain as assistant first-team coach and Christophe Lollichon as goalkeeping coach, while Chris Jones would step up to the role of first-team fitness coach.
Di Matteo and Newton's first task will be to navigate Tuesday night's FA Cup fifth-round replay at Birmingham.
Source: PA
Source: PA