The Academy graduate had been expected to leave the club at the end of the current season, but he has impressed Gerard Houllier sufficiently since being promoted to third-choice to earn another year with the Reds.
Harrison, speaking to the club's official website, said: "I was made up when I found out the club wanted me to stay and couldn't believe it at first. Joe (Corrigan) was the one who told me. At first I thought he was talking about another club because he said jokingly 'you don't have to do this if you don't want to but..
"I was thinking to myself that I was off to another club but then he said Liverpool wanted me to stay for another 12 months. It was unbelievable and I immediately said yes, it was a great moment."
