The new deal will keep the 34-year-old at the club until the summer of 2014.
“I am obviously very happy,” he told the club’s official website.
“The adventure continues and I still want to play, to have fun on the field within this group.
“I hope to continue being effective next season.”
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Liverpool have unveiled their new home kit for next season, sticking with the hugely popular retro styling of the current shirt.
The reputation of the Premier League means it is the most popular and one of the most watched leagues in the world.