The midfielder had initially returned to his former club for a month but has since decided to stay on until January 2.
"I'm absolutely delighted, it's exactly what I wanted and we've managed to get it done," Jenas told the club's official website.
"I made it clear to the manager at the beginning that I wanted to extend the loan if possible. The initial month was always going to be tough because it was hard for the manager to fit me in without upsetting the rhythm."
Forest boss Sean O'Driscoll added: "Every time he's come on he's made a difference. he's given us that little bit of Premier League class, he's experienced and he's keen to stay. It was an easy decision really and we'll monitor the situation as it goes on."
Jenas found the net for the Reds in their 4-1 win over Barnsley at the weekend.