The Premier League club's captain, who signed a new four-year deal only last season, had asked to return home to Argentina for personal reasons.
But after several days of delicate negotiations, the 31-year-old has agreed to stay on Tyneside and will continue to wear the armband.
Pardew said: "Coloccini is going to stay with us and will remain as captain, which is fantastic news for us.
"We have managed to persuade him that, as much as his family, we need him. He has shown fantastic loyalty to come and play and see us through to the summer at the very least.
"It's a situation that me and 'Colo' have been on a personal journey to make sure that he understands that he has a big responsibility here to fans and to families of this club."
Newcastle had bolstered their defensive ranks with Mapou Yanga-Mbiwa - an apparent replacement for the Argentina international - as well as full-backs Mathieu Debuchy and Massadio Haidara but Coloccini's U-turn is a huge boost.
He has been a cornerstone of the Newcastle side since arriving from Deportivo La Coruna in 2008 and was named in last season's PFA Team of the Year after helping the club qualify for the Europa League.