It was announced last night that Welshman Williams, 20, would remain with the Tractor Boys after impressing on an initial one-month loan from the Eagles.
Palace have insisted on a 24-hour recall clause though and could bring back Williams at any point in the remaining month or so of the campaign.
Speaking to the Ipswich website, playmaker Williams said: "It's been a great experience for me and I've loved working under the manager and TC (assistant Terry Connor).
"I'm excited to get back training with the lads and playing my part as we try and push into the playoffs."
Ipswich are two points off the top six with seven games of the season remaining. They next travel to Blackburn Rovers on Saturday.