The exact length of the defender's new deal is unknown (via The Guardian).
Denmark's 27-year-old captain is likely to serve the club for at least another five years.
A summer of speculation can now be put to bed.
City's interest soon waned when they agreed a deal with Fiorentina to bring in Matija Nastasic.
Liverpool's indifferent start to the season hasn't quashed Agger's desire to stay. He made some passionate comments to Liverpool's official website:
It means everything to me. This is where I want to be and I'm happy the club want me. I am really happy right now. I've never wanted to go anywhere else
I feel I am a part of this club - and I want to be a part of this club in the future. I like the way it is going right now with the style we're playing, and hopefully the results will come soon as well
The support from the fans has been unbelievable. The game when they were singing all the songs about me, it was difficult to focus on the game!
Agger has made five Premier League appearances this campaign. He currently averages one tackle, 1.2 interceptions and 5.2 clearances per game. His pass success rate stands at an excellent 90.8 percent—higher than club captain Steven Gerrard (via WhoScored).
Liverpool's good news doesn't end there. The defender was recently given the all-clear after being stretchered off in the recent fixture against Manchester United (via The Sun). He played in the 5-2 win over Norwich without any problems.
As Brendan Rodgers' rebuilding process continues to take shape, Agger's desire to play in front of the Kop will be a major boost. He is a key individual in a squad that is rapidly decreasing in age and experience.
Alongside the likes of Gerrard, Pepe Reina and Martin Skrtel, the Danish defender has a major role to play in the development of the club's young stars. Teens such as Raheem Sterling and Suso will continue to make an impact with players of Agger's calibre behind them.
The Merseyside team is struggling for consistency. Agger's commitment could be the next step towards an exciting future for Rodgers' side.
Do you think Agger's new deal is a massive boost to Liverpool? Let me know in the comments section or on Twitter.