Under the terms of his previous deal, the 30-year-old was shortly due to return to his Premier League employers.
However, Lappin will now remain with the Blades until the start of 2014.
"Simon is staying with us and we're pleased about that because he's done well since we've come in," said manager Nigel Clough.
"Simon is technically very sound which is good. I know that, despite being seen as a defender, he probably prefers to play further forward which is where we've used him. Simon has got good experience and that's always beneficial too."
Lappin has just made two appearances for his parent club.