Dazzling displays in the Champions League forced Tottenham to persistently deny that the 21-year-old Wales winger could be lured away from the club.
Having signed a new four-year deal only last May, the latest agreement contracts Bale to Spurs until 2015.
"It is great to commit to this club and hopefully we can achieve what we believe we can with this squad," Bale said in a statement. "I definitely believe we can challenge for a title very soon. That is why I have signed. Every year as a minimum we are aiming to qualify for the Champions League so we are definitely going in the right direction.
"We have proven in the Champions League this season that we can compete with the best and we are in the last eight now and there is no reason we can't go further this season and in years to come."
Tottenham's progress in Europe has owed much to Bale, who scored a hat trick in a group-stage match at Inter Milan that still ended in a 4-3 loss before he tore the European champions apart again when the London club won 3-1 at home.
Tottenham is preparing for a quarterfinal with Real Madrid in its first season in the Champions League.
Bale joined Tottenham in 2007 from Southampton - where he had been teammates with Theo Walcott - for 5 million pounds (then $8 million) but endured a frustrating start to his north London career.
Although he scored three times in his first four starts, a series of injuries stymied his progress and he played 24 league games over two years before finally featuring on a winning side in his 25th.
He became a regular substitute until manager Harry Redknapp picked him for an FA Cup match in January 2010 and he performed well enough to keep his place even when regular left back Benoit Assou-Ekotto was fit again.
Redknapp pushed Bale forward onto the left wing, allowing him to attack without having to think so much about the defensive aspect of his game.
"It's great to have Gareth sign a new contract at the club," Redknapp said. "He is a fantastic player and the type of player we need to be keeping at Spurs. Gareth is now one of the top left-sided players in the world, he really is an amazing talent and can only get better. He is a smashing lad as well which is equally as important. He has got his whole future ahead and he has everything going for him." Tottenham's hopes of qualifying for the Champions League next season took a hit on Saturday when the team was held to 0-0 by West Ham.
Chelsea - in the fourth and final Champions League spot - can move five points ahead of Tottenham by beating Manchester City on Sunday.