The new four-year deal will keep the 26-year-old at The Hawthorns until the summer of 2016.
West Brom boss Steve Clarke said: “After strengthening the squad during the transfer window, it’s equally important to hold onto your best players and I’m delighted James has signed a new deal.
“The new contract is fair reward for James’ hard work and efforts.
“He’s been here a number of years now and has always been one of the key players.
“This is a good message to send to the rest of the squad, that if you do well and keep improving you will be rewarded.
“It’s also a big coup for the club because I’m sure that if James was on the market, there’d be a few clubs interested in him.”
West Brom’s sporting & technical director, Dan Ashworth, added: “I’m delighted James has committed his future to the club for the next four years.
“He’s been one of our most effective players in the Premier League over the last couple of seasons and fully deserves his improved deal.
“The fact we’ve got a player of James’ calibre to sign a longer contract is a sign that the club is moving in the right direction.”
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