The news will come as a big relief to Hammers fans, who had feared losing their skipper to local rivals Tottenham after they had a £7million bid for the 29-year-old rejected last month.
Parker, who joined the club from Newcastle in 2007, is a firm fans' favourite and is so highly rated by co-chairman David Sullivan that he professed last year his skipper was the only member of the entire Hammers squad he would not consider selling.
A move across London to Spurs would have given Parker the opportunity of playing in the Champions League but he insisted his love for West Ham is so strong that leaving the east London outfit never crossed his mind.
"With the transfer window there is all this big hype," Parker told www.whufc.com. "There are obviously times when it is stressful but from the outset I always knew this was where I was going to be.
The owners came out and spoke last season and I am more than happy here. Everyone knows I enjoy playing my football here. I really wanted to stay here, give it a shot and see what can happen."