The 23-year-old has had previous loan spells with Burton Albion, Notts County and Northampton Town.
He contributed five goals to Burton's League Two title win during a six-month loan spell in 2014-15.
Blyth, who has yet to play a first-team game for Leicester, is U's manager Richard Money's 12th signing of the summer transfer window.
Find all the latest football transfers on our dedicated page.
League Two side Cambridge United have signed forward Jacob Blyth on a one-month loan deal from Leicester City.