"We are delighted with the news," said boss Billy Davies.
"Although he has a lot of games under his belt he is still a young man and I'm looking forward to working with him and helping him improve as a player still further."
25-year-old Morgan has made over 250 appearances in all competitions for the Reds.
Loan signing Gary McSheffrey meanwhile is open to the prospect of a longer stay at the City Ground.
"What this does is give me the chance to have a look at the club," he told the Evening Post after joining from Birmingham City.
