"I'm obviously pleased to stay here," he told the club's website.
"Ipswich is a great club and I'm pleased with the way things have gone for me this season in terms of being involved with the first team."
He added: "I think I have progressed as a player this season and I'm enjoying playing under the manager [Roy Keane]."
Ipswich currently lie 20th in the Championship, having climbed out of the relegation zone courtesy of a 10-game unbeaten run.
"Results have not gone as we would have hoped for but our performances have been good lately and there is a confidence in the squad now that things are turning around," Peters continued.
"If we can keep our run going and win a few more games then we will move up the table quickly and get closer to the play-offs. That's the aim."