The 23-year-old Watford midfielder was set to join the Iron permanently in January but FIFA rules did not permit the move because Walker had already represented the Hornets and Stevenage this season.
Since his loan move to the Iron, Walker has scored three goals in 17 appearances and feels at home at the club.
"I've loved every minute of my time at Scunthorpe," he told the club's official website.
"I know I'm only on loan, but it just feels like my club. I'm just hoping things can be agreed for next season."
