The former Norwich winger has made five appearances since being loaned to the League One strugglers on October 1, and the Blades have announced he will stay at Bramall Lane until January 1.
United manager Nigel Clough said: "Simon is staying with us and we're pleased about that because he's done well since we've come in.
"Simon is technically very sound which is good. I know that, despite being seen as a defender, he probably prefers to play further forward which is where we've used him.
"Simon has got good experience and that's always beneficial too."
Lappin has made only two appearances for Cardiff since joining on a permanent deal from Norwich in January and appears well down the pecking order under Malky Mackay.