The 38-year-old took charge of the Tangerines towards the end of 2005 - marking his first game in charge with a 5-3 win over Scunthorpe - and guided them to promotion back to the Championship last May.
He told the club's official website: "I am pleased to sign it. Obviously there has been a lot of talk about it over the last few weeks and months, but it has never been top of my agenda to get it sorted.
"I have wanted to carry on getting things right on the field, but I have had a lengthy conversations with the chairman and club president over the last couple of weeks and we got round to getting a few things agreed and I am really pleased to have signed it.
"I've loved every minute I have been here. I was lucky enough to have played here as a player and then obviously the chairman gave me my break as a manager."