The 29-year old will remain at Upton Park until at least 2014 in what is a massive coup for the club, especially with the interest being shown in the former Newcastle man and current Hammers skipper.
Parker said he was delighted to now have the next few years of his career sorted with the club that he loves.
"I am just absolutely delighted to have signed the contract," Parker told the club's official website. "Everyone knows I enjoy playing my football here. I really wanted to stay here, give it a shot and see what can happen.
"With the transfer window there is all this big hype. 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."