The arrival of Baggio completes a busy week for Blackburn, who also tied up a loan deal for Markus Babbel and signed Rangers ace Barry Ferguson, as Graeme Souness continues to make the money from the sales of Damien Duff and David Dunn go a long way.
Blackburn chief executive John Williams also confirmed details of the deal which brought Ferguson, described by Souness as an "outstanding" player, from Ibrox.
"The deal is £6.5 million guaranteed with a further £1 million possible, depending on Rovers' future involvement in European competition," said Williams
Baggio, Ferguson and Babbel are all expected to play some part in Blackburn's next league match, the visit from Liverpool on September 13.
Meanwhile, Glenn Hoddle revealed how he persuaded Stephane Dalmat to choose Tottenham instead of Middlesbrough in a brief conversation in his pidgin French.
The Spurs boss had a short chat with the Inter Milan midfielder on Friday night, in which he talked the 24-year-old out of joining Boro and into moving to White Hart Lane.
Boro had made an agreement with Inter for the Frenchman's transfer, but personal terms were not finalised, allowing Tottenham to nip in and strike a deal with the Italians.
Spurs are now confident of completing his season-long loan before the transfer deadline at 5pm today.
However, Hoddle's crucial conversation with Dalmat was not without its complications, as the former Lens and Marseille player speaks very little English and Hoddle admits the French he picked up during three years at Monaco, from 1987 to 1990, is more than a little rusty.
Claude Makelele's agent claims the midfielder's transfer to Chelsea is "very unlikely" because of a new dispute between the player and his current club Real Madrid.
Both clubs and the player have agreed terms in a 24 million euro (£16.6 million) transfer, but the French international is refusing to complete the move, claiming Real are refusing to give him his slice of the transfer fee.
With time fast running out until the transfer window closes the Spanish deadline was midnight yesterday Makelele's representative Marc Roger fears the deal could fall through.
Real's sporting director Jorge Valdano claimed that the French international was set to complete his move to Stamford Bridge today. Valdano added the deal would be finalised when Real receive the necessary guarantees from Chelsea's bank.
Leeds last night reiterated they have no plans to offload striker Mark Viduka before today's transfer deadline. Viduka, who scored the winner in Leeds' 3-2 victory over Middlesbrough at The Riverside, has been linked with a number of clubs over the past few months with Blackburn rumoured to be the latest club interested. Leeds boss Peter Reid is instead hoping to add to his strikeforce with the capture of out-of-favour Marseille forward Cyril Chapuis. The striker arrived in Leeds on Saturday night and the manager is hopeful a deal can be struck ahead of today's 5pm transfer deadline.
Meanwhile Reid has continued his squad building at Elland Road after signing Chapuis' Marseille team-mate, Salomon Olembe, on a season-long loan deal.
Birmingham have rejected a bid from Everton for midfielder Robbie Savage.
The tough-tackling Welsh international had been linked with the Goodison Park club after he revealed he would join Everton if he ever left St Andrews.
And, with Everton boss David Moyes missing out on two midfield transfer targets recently, a move for Savage was put in motion in order to beat today's 5pm deadline.
Moyes lost out on Rangers' Barry Ferguson who joined Blackburn and also pulled the plug on a deal for Fulham's Sean Davis, because the player could not pass a medical owing to a knee injury.
That led to Moyes making a move for Savage who made the news on Saturday when he was accidentally hit in the face by referee Matt Messias during Birmingham's 1-0 win at Newcastle.