The England goalkeeper signed the deal, which includes a further 12-month option in the club’s favour, to effectively pledge his future to the Premier League side until 2019.
Head coach Alan Irvine revealed his delight that last year’s Supporters’ and Players’ Player of the Season has tied his long-term future to the club.
“This is fantastic news for everyone connected with the club as Ben is an extremely important player for us, both on and off the pitch," he said.
“He’s a great personality, a great character and leads by example. This is a magnificent signing for the club.
"Ben is one of the best keepers in the country, which he showed when he played really well for England against Costa Rica at the World Cup.
“Ben is extremely professional, which is infectious in training, as he demands high standards of himself and others.”
The former Manchester United keeper admitted the decision to sign was an easy one for himself and his family.
“When I signed here permanently, I said this is the sort of club I could see myself finishing my career at,” said the 31-year-old.
“And that’s exactly how I felt when the club said they wanted to negotiate a new contract. It was something I wanted to get sorted as soon as possible. I’m very happy here. It was a very obvious and easy decision for me and my family.”
Foster made 24 appearances for Albion last season and played a crucial role in helping the club retain their Premier League status after four months out with a broken foot.