The 17-year-old has not looked out of place with his appearances this season and Kevin Blackwell has given him his first professional contract.
Walton made an instant impression in the pre-season clash with Valencia in which he scored from the penalty spot before being sent-off.
Meanwhile, Cameroon international Serge Blanco has been released after failing to break into the first team.
Steve Guppy, who was released by United along with Craig Hignett, has joined Championship rivals Stoke on a short-term contract.