Lingard's initial one-month youth loan was due to expire this weekend but the England U21 international will now remain at St Andrew's until 14 December.
The 20-year-old has scored five goals since arriving from Old Trafford last month, with four of those coming in a stunning debut against Sheffield Wednesday.
Lingard enjoyed a stint at Leicester last season, before returning for United's pre-season tour of Asia, where he finished as top scorer with four goals.
But manager David Moyes was keen to see him given regular first-team football and Blues boss Lee Clark is now grateful to have secured his services for an extended spell.
"It's very positive for us," Clark told the Birmingham Mail.
"There were a lot of clubs in for him before we initially got him, but the impact he has made since he has been here meant that even more clubs became keen.
"But we thank Manchester United and David Moyes for their help on this one and I think they can see that we are hopefully developing the player the right way for them."