Davies has been sidelined since damaging knee ligaments during the home fixture with Bury back in October.
The striker is not expected to be involved in this Saturday's home fixture with Oldham Athletic but Parkinson acknowledges it is still good to have the 28 year-old coming back into contention.
Parkinson said: "Steve has joined in with full training today (Thursday).
"He had a good week or so previously to this mainly with Nick Allamby (Head of Sports Performance) and doing a few football drills.
"He has stepped things up now by joining in with full training today. He looked great so that is obviously a positive.
"Steve was in the team and looking to be getting himself into some good form when he got injured so it will be great to be able to call upon him when we can."
Davies' development following a period in the treatment room comes after Josh Morris made a welcome return from his own injury during the second period of last Saturday's Emirates FA Cup third round tie at Bury.
Parkinson added: "It was great to get Josh back on the pitch again.
"He looks a lot more confident about the knee now and it is a great bonus for us to have him back.
"Now he has to force his way back into the team."
With Morris likely to be involved in City's match-day squad for the Oldham fixture, Nathan Clarke is also back up for selection after serving a one-match ban last weekend.
Given Christopher Routis' performance at Bury though, there is expected to be a battle between the Frenchman and Clarke for a spot in central defence alongside Rory McArdle this Saturday.
Parkinson said: "I was pleased with Chris's performance last weekend.
"His energy around the training ground is infectious and he deserved his start.
"He can comfortably play in defence or midfield, he has great athleticism.
"He played very sensibly at the back against Bury in difficult conditions."