Parker has been West Ham’s stand-out man for the past two seasons and following the escape from relegation last season he was the only player safe from the transfer list, according to co-owner David Sullivan.
Parkers new contract will see him stay at the club until 2014 with an option for a further year. It will also make him the clubs highest paid player.
Speaking via the official site, Scott said, “I always knew this was where I was going to be.”
"I am just absolutely delighted to have signed the contract. Everyone knows I enjoy playing my football here. I really wanted to stay here, give it a shot and see what can happen. I just want to do the best for West Ham and I can't wait for Saturday against Chelsea."
Parker also had some words of praise for the Hammers fans adding, “The fans mean a lot to me. I came here and didn't start the best with an injury. Since then I have been in the team and the fans have taken to me very well.
“I think if you asked any player, the most important thing is feeling welcome and being appreciated by the fans. I must say that for me personally as a player that is the one thing I do feel. I feel appreciated.
“The fans show that every Saturday when they turn up home and away. That had a massive factor in me deciding to stay and obviously sign a new contract.”