The 42-year-old put pen to paper on a new two-and-a-half-year deal last year and has now pledged his future to the Saddlers once again by extending his stay by a further 12 months.
He told the club's official website: "I'm pleased to extend my contract. I said from the very start that this was always going to be a long-term project and we're still in the early stages of that, but things are certainly progressing well.
"I want to continue building for the future of this club and whilst I am offering the players longer-term deals, it gives it more credence if I have the same.
"This club is known for trying to do things the correct way and we are investing in the infrastructure of the club to make it a more forward-thinking place with solid foundations.
"It's not just Saturday to Saturday, or even season to season, this is a long-term plan and I am pleased to be leading the club in the direction that we want to go.
"It also allows me to sit down with Richard O'Kelly (Smith's assistant), who has been a big part of what we are trying to achieve here, and put plans in place to secure his future with the club."