Milner, 33, joined the club on a free transfer from Manchester City back in 2015, the former England global has agreed on fresh terms with the Reds with his previous contract expiring at the end of the season.
The Reds are now benefitting as a result of that, having won the Champions League for the first time since 2005 last season.
Liverpool manager Jurgen Klopp has expressed happiness over his contract extension with the club saying that "each and every day felt so special". I spoke to Pete and Pep, they saw it exactly the same way, then the decisive people started talking and a couple of days ago they agreed, so it's really, really nice to know the fact that we will stay here longer.
Milner, who turns 34 in January, joined the European champions in 2015 on a free transfer from Manchester City and came off the bench in their Champions League final win over Tottenham last season. "We want to go there and win", he told his club's website after the victory over the Hornets.
"We need every point we can get because it's a hard and long time".
Klopp also cast a questioning look at the arrangements in place for FIFA's Club World Cup.
"We feel this represents one of the big moments of our stewardship of Liverpool Football Club so far as we believe there is no better manager than Jürgen".
"Obviously winning a trophy previous year, it's easy to sit back or take your foot off the gas, and we've gone the other way", Milner added. "His input and collaboration has been just as important as anyone else's in getting us into a position to compete for the game's top titles". "There's a big game Wednesday and hopefully we can do a job to get into the final on the weekend".