Bailey was brought to the club on the eve of the new season, along with Leeds youngster Andy Keogh, as cover for the injured Steve Torpey.
Keogh has made the bigger impact of the two though and with the arrival of Tom Brighton from Rangers, Bailey has been considered surplus to requirements.
Iron manager Brian Laws said: "I'd like to thank Mat for what he did in the first couple of games, but I thought it would be unfair to keep him now we've brought Tom Brighton in.
"I'm sure he'll go back to Stockport better for the experience he's had here though."