Foster made nine appearances for the Reds during last season's campaign, including a brilliant performance in the penalty shoot-out victory over Tottenham in the Carling Cup final.
United boss Sir Alex Ferguson added: "We are delighted that Ben has signed a new four-year deal.
"Ben is seen as one of the best young goalkeepers in England and we genuinely see him as a successor to Edwin van der Sar."
Foster, who is considered a potential England number one, had surgery on a ruptured thumb ligament in May which ruled him out for the final month of last season.
That meant the twice-capped England international missed the Champions League final against Barcelona and the World Cup qualifiers against Kazakhstan and Andorra in June.
Foster, who missed most of the 2007/08 season following cruciate ligament surgery, has been unfortunate with injuries having also suffered an ankle ligament injury just a few weeks into last season.
The goalkeeper joined the club in July 2005 from Stoke but spent two seasons on loan at Watford.
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