He has two years remaining on his existing deal and has signed up for another two years, committing himself to the Anfield club until 2013.

The midfielder told the club's official website: "I am very happy that we have reached an agreement. Of course, to be at a club like this is a dream come true and I want to keep playing here.

"Hopefully now I can concentrate on the hard work that needs to be done and try to play better and better and win some silverware."

The Israeli international, who moved to Merseyside from West Ham United in July 2007, scored nine goals in 42 appearances during 2008-09.

He follows Steven Gerrard, Fernando Torres, Daniel Agger and Dirk Kuyt in committing his long-term future to the club.

Manager Rafa Benitez said: "You know that our idea was to extend the contracts of some players and Yossi was one of these players.

"He has been really good for us over the last year, scoring crucial goals and getting assists, so we wanted to keep him and I'm really pleased with the extension."

Liverpool have also confirmed Jay Spearing and Stephen Darby have agreed new terms.

Spearing, who captained the FA Youth Cup winning side of 2007, has made a big impression as a competitive midfielder and made his senior debut last season as a substitute in the Champions League home victory over Real Madrid.

The memory of the Kop rising to sing the youngster's name as he trotted onto the pitch alongside some of the greats of European football is one of the more endearing moments of last season, and underlined their desire to see local youngsters given a chance by Benitez.

Darby, a former reserve team skipper, made three first-team appearances last season.

www.liverpoolfc.tv