Confirming the news to the Official Club Website, Town boss Joe Royle said: "I have always wanted Jim here and it's a big boost for the Club that he has decided to stay with us.
"He's a massive influence around the place, his enthusiasm comes through to all the players and don't underestimate what a big player he is for us on the pitch either.
"We saw Teddy Sheringham being voted the most valuable player in the Championship last season at the age of 39 so players well into their 30s are still making their mark and Jim is the same."