The Wales international has made a big impression since joining the Tractor Boys at the end of February, quickly endearing himself to the Portman Road faithful with a wonder strike in the 2-1 victory over Derby.
Williams now has the opportunity to add to his six appearances for the club and Ipswich have the option of extending the deal further should they make the play-offs, although his parent club do have a 24-hour recall option.
"I'm delighted to be extending the loan because I've really enjoyed my time at Ipswich," the 20-year-old midfielder told Town's official website.
"It's been a great experience for me and I've loved working under the manager and TC [Terry Connor].
"I'm excited to get back training with the lads and playing my part as we try and push into the play-offs."