Williams received the honour at the league's awards banquet ahead of Tim Brown of the B.C. Lions in voting conducted by the Football Reporters of Canada and the eight CFL head coaches.
It's the second straight year Williams has claimed a CFL individual award, being named the league's top rookie last season.
The five-foot-nine, 155-pound Williams had a league-record six return touchdowns in 2012 (five punts, one missed field goal).
Williams was tops in punt returns (78 for 1,117 yards) and second in missed field goal returns (five for 256 yards).
Brown finished second to Toronto's Chad Owens in all-purpose yards (2,687), was second in punt returns (72 for 914 yards, two TDs) and third in kickoff returns (55 for 1,303 yards).
The CFL awards are sponsored by Gibson's Finest.