The experienced midfielder has been an instrumental part of the Blues squad since joining from Burnley in the summer of 2011.
Elliott's good form continued last season, when he scored nine goals in 47 appearances, and he joins Paul Robinson, Akwasi Asante, Callum Reilly, Mitch Hancox and Colin Doyle in committing his future to the club.
"I'm delighted we have got Wade back," said boss Lee Clark. "He was a really important member of the team last season.
"He worked very hard for the team and scored some valuable goals.
"He is fantastic example to the younger players and I really wanted him to be part of this season so it's great to have him back."