"We are absolutely delighted with the news," said manager Neil Warnock.
"It is the best signing I've made for many years.
"This signing shows the board have complete confidence in what we are trying to do here.
"The players want to play for Sheffield United and I want to manage Sheffield United. Phil signing the new deal is a fantastic boost ahead of the West Ham game."
The news comes as good news to all Blades fans, as it ends speculation that Premier League giants Aston Villa and Charlton Athletic won't be able to sign the highly rated England U-21 defender.