"This is extremely good news for Liverpool moving forward and demonstrates our intention to build on the progress we have already made this season," said Rafael Benitez.
"Daniel is still young, but with great quality and will be a very important player for us in the years ahead.
"I'm sure there were many other clubs monitoring the situation closely, but throughout our discussions, Daniel made it clear that he wanted to stay at Liverpool and achieve success here.
"I'm delighted we've secured his future at Anfield."
