The 20-year-old initially joined the Blues on loan on September 21 and made an immediate impact by scoring four goals on his debut in the 4-1 home win over Sheffield Wednesday.
He has netted twice more in six games since then with City winning three, drawing one and losing three in his seven appearances.
Lingard will now be available to Birmingham boss Lee Clark for a further eight games - injury and suspension permitting - including the clash with Barnsley at St Andrew's on New Year's Day.
The England U21 international has yet to make a first-team appearance for United.
Clark was quoted on Birmingham's official Twitter account as saying: "Brilliant news. We are a fantastic team when he's playing in it. Everyone knows he's a very talented player."