"I am delighted to commit my future to Manchester City," he told the City website. "The last week has been extremely difficult for my family and I, but it is a terrific boost to sign a long-term deal, which I hope shows my commitment to the club and fans, as well as the club's commitment to me.
"The events surrounding my withdrawal from the Ireland squad last week have been well publicised and are not something I want to dwell on. However, I want to reiterate my regret over what happened. I received some very upsetting news when I was told by my partner that she had suffered a miscarriage and unfortunately became swept up in an unforeseen series of events on an issue that was deeply personal to us. At no time did I realise that an issue which should have been private and confidential between my partner and I would receive so much media attention - but now it is time for me to move on.
"I would like to thank everybody who has sent me messages of support over the last few days, including fans of City and Ireland. The understanding shown to me by Sven Goran Eriksson, the City players and backroom staff has been fantastic. I am glad to be back training at City and looking forward to being part of the squad to travel to Fulham on Saturday.
"I have been more satisfied with my form this season than at any time since I broke into the first-team squad. There is such a positive mood amongst our squad and we are all completely focused on maintaining our excellent start to the season."
Fellow Academy products Michael Johnson and Nedum Onuoha have also signed new deals this summer, and CEO Alistair Mackintosh added: "Stephen's new contract is a reward for his improvement over the last 2 years. It also underlines the club's policy of enhancing the squad through both the kind of signings made since Sven's arrival and the continuing development of our excellent home-grown players from the Academy."