It is a somewhat U-turn move from the 26-year-old, who had looked set to leave the Midlands on a free transfer at the end of the season.
However, Reo-Coker has now admitted his desire to stay at the club after being impressed with their increased movement in the transfer market and rising ambitions, and feels the future is bright with the Birmingham outfit.
Reo-Coker, who is now a regular first-team starter under Gerard Houllier, told The Express and Star: "It is very positive. I think the club is heading in the right direction.
"There is nothing more and nothing less to say than the club is going in the right direction with signing players like Darren Bent.
"The manager and the chairman are showing how ambitious and how serious they are taking things forward at the football club.”
Reo-Coker was full of praise for former England Under 21 team-mate Bent, saying: "He is a great goal poacher and his goalscoring record is phenomenal. You only have to look at his record from all the clubs he has been at to see that.
"I think he is only nine or 10 goals away from scoring 100 goals in the Premier League.
"I have been fortunate enough to know Darren from a young age, having played with him at England Under 21 level, and he is a fantastic footballer."