The 25-year-old flanker signed a new two-year contract at Kingston Park in January.
Welch has made over 130 appearances for the Falcons since 2008.
"We're delighted that Will wants to take on the club captaincy again. He's been with the Falcons since he started to get involved with professional rugby and has had to ride some tough times with the club," head coach John Wells told Newcastle's official website.
"Going down to the Championship was hard for the club and was hard for him, but then he's had to deal with two years in the Premiership afterwards which again, have been tough. But Will has helped keep the squad together and he has done a remarkable job, keeping calm and bringing a balance to the whole thing behind the scenes."
Newcastle start the new Aviva Premiership season at home to Gloucester Rugby on October 16.