The duo, both 20, have agreed terms on deals that will last until 2014, with the option of an extra year.
A statement on the Palace website confirmed: "Matt Parsons and Jason Banton have both signed contract extensions with the club until the end of the 2014 season, both have the option of a year's extension.
"In addition, Banton has extended his loan at Plymouth Argyle until the end of the season, although Palace have a 24-hour recall clause."
Defender Parsons has made 10 first-team appearances for the Eagles, with his last outing coming in the FA Cup third-round replay defeat at Stoke this season. He has had two loan spells away for the club, at Barnet in 2011 and Wycombe earlier this campaign.
Winger Banton, who has scored three goals in his five appearances for League Two side Plymouth, made his Palace debut against Stoke in the original third-round tie in January.
He arrived at Selhurst Park in October after failing to win a contract with MLS side Seattle Sounders, following his release from Birmingham in 2011.