The Finnish international will sign the new deal on Thursday when he returns with the club from their Champions League qualifier against CSKA Sofia in Bulgaria.
The 32-year old, now into his sixth year with the club said: "Obviously I'm very happy to agree a new contract with Liverpool.
"We have been talking for a few weeks and I had no hesitation in committing my future to Rafael Benitez.
"Everybody wants to play for Liverpool at the moment and it is an honour to say that I will be here for at least another three years.
"I have won every single medal at the club apart from the Premiership and it would be very nice if I could win that within the next three years.
"This is the greatest football club in the world and after Steven Gerrard, Jamie Carragher, Dietmar Hamann and Djimi Traore all agreed new deals, I'm delighted to have done the same.
"These are good times for Liverpool and I'd like to repay the faith the supporters have shown in me by winning more trophies."