Flitcroft took charge of the team at the start of the year when Barnsley were bottom of the Championship and guided the Reds to survival on the final day of the campaign. He also helped guide Barnsley to the quarter finals of FA Cup against Manchester City.
The new deal will also keep David Flitcroft's assistant manager Micky Mellon, technical coach Martin Scott and the other backroom staff at Oakwell.
Further details will be announced at a press conference on Friday 17th May 2013.
