The new deal will keep the 29-year-old at White Hart Lane until the summer of 2015.
Defoe had been linked with a move away from Spurs in recent months.
Defoe has made 300 appearances and scored 119 goals for Tottenham.
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Chelsea have struggled to build momentum in the opening stages of the campaign and are currently looking over their shoulders at the relegation zone.
Who of Europe’s top strikers will move to England this summer?