Leeds chairman Ken Bates said: "I'm very pleased. Simon has committed his future to the club despite enticing offers from elsewhere. We have every confidence in him. He has won two promotions in his managerial career - one here and one at Blackpool - and we're hoping he can make that a hat-trick at the club where he first started out."
Grayson, appointed as Gary McAllister's successor in December 2008, spoke of his desire to take the club back to the Barclays Premier League.
He said: "I'm delighted the club have offered me a longer contract. My intentions have always been to take the club forward and after achieving promotion last season, I hope we can go on to fulfil everyone's dream of winning promotion back to the Premier League."
Source: PA
Source: PA