The 20-year-old moved to the League One club at the beginning of September on an initial one-month loan deal.
Caretaker manager Graham Kavanagh has said that he has been impressed with Townsend's performances since moving to Brunton Park.
"Conor has done really well," Kavanagh told Carlisle's official website.
"He has settled and adapted to life in League One and his performances have reflected that. The challenge now is for him to maintain the standards he has set himself. He has two months with the club to do that and we're confident that he is going to develop and progress even more.
"He's a great lad to have around and we're all very pleased that we will be able to continue working with him."
Townsend has made three appearances for Carlisle.