"I would prefer permanent signings but Liverpool made it clear they want to keep him," said O'Neill. "He had a very good year last year and I think it might say something about him that, having had the experience he did last season, he didn't want to go back to Liverpool knowing there wasn't a great chance of playing too many games. I'm delighted with Liverpool."
Carson, 21, admitted spending last season at Charlton increased his "hunger" to go out on loan again.
"I had some concerns when I came back from pre-season that I wasn't going to play many games for Liverpool and I asked the boss if he would consider letting me go out on loan," he said. "At the time he said, 'I can't because I haven't got another keeper'. I've got to thank him because he's worked to find a replacement to give me this opportunity."