After some poor performances, loss of fitness and the sacking of manager Kevin Blackwell, new manager Dennis Wise decided to strip Butler of the captaincy after a fall out, and he was told he was free to leave Elland Road on loan until January then on a free transfer. He duly moved on loan to League Two Milton Keynes Dons in November 2006. After returning to his parent club, he was released from his contract with Leeds leaving under poor terms with Dennis Wise, and two days later signed a permanent contract with the Dons.