The 24-year-old joined the Blades on an initial one-month loan as cover for the suspended Paddy Kenny and has only conceded twice in four games.
Blackwell was grateful to Blackburn manager Sam Allardyce for giving the deal the go-ahead.
"We are indebted to Sam because we know he will have been concerned about leaving his own club short of cover," Blackwell told the club's official website.
"Getting Mark in for longer is a big relief considering the position we find ourselves in.
"He has settled, done well and his presence will maintain continuity rather than having to start all over again."