Talks over the extension opened last week, but manager Rafa Benitez revealed Gerrard was so happy to stay he agreed to the extension, which will keep the England international at the club until he is 32, immediately.
Related ArticlesKuyt joins in signing dealGerrard denies nightclub attackBenitez: I almost quit Liverpool'Liverpool best in Europe'Benitez faces anxious international waitLiverpool look to futureHe said: 'Steven has once again shown his commitment and it was an easy deal to agree. As soon as we offered him the option he said yes. There were no problems at all. He wants to stay for life.
'This deal sends out another clear message that we are moving forward as a club. To know we have a player of Steven's quality with us for many more years is a great boost for the club and the fans.
'He is clearly a player who inspires those around him and even though he is playing very well at the moment, I still think his best years are ahead of him. It is fantastic news for the club.'
Benitez has moved quickly to secure the futures of his key players after the end of his own interminable contract saga in March. As well as Gerrard, talks are ongoing over new deals for Alvaro Arbeloa, Dirk Kuyt, Fabio Aurelio and Daniel Agger.
Fernando Torres and Jamie Carragher, whose current deals expire in 2013 and 2011 respectively, are expected to open negotiations soon.
Gerrard is due to appear at Liverpool Crown Court today to enter a formal plea over his alleged involvement in a nightclub brawl. He will appear with six other men to plead over a single count of affray after an assault charge, related to the alleged incident in Southport's Lounge Bar on December 29th, was dropped last month.