The 33-year-old, who will be contracted to the club until 2016, has admitted that he received offers to move elsewhere with the lure of receiving more first-team football.
"I'm delighted," Monk told the club's official website. "This club has been my life for nearly 10 years and I love it here. My heart is here and I've never wanted to leave from the very first day I arrived.
"I've had a few offers to move elsewhere this season and I've had to do a lot of soul searching to establish what's best to prolong my career. The club didn't want me to go, so I felt that while I am still contributing to the team, on and off the pitch, this was the place I wanted to be."
Monk has made just five appearances in the Premier League so far this season.