The 21-year-old's future at the club had been the subject of speculation following the signing of Robin van Persie from Arsenal last week.
However, he has now committed himself to the Red Devils, for whom he has made 64 appearances scoring 17 goals, much to the delight of his manager.
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"He has become an important player at international level as well, as the maturity of his performances at the European Championships showed. This year is another important one for him. He has a bright future ahead of him."
Welbeck is equally pleased about signing his deal to remain at United and is eagerly anticipating achieving further success with the club.
He added: "Playing for United is all I’ve ever wanted to do – it’s the club I’ve supported all my life. I can’t wait for the challenge of the new season to play my part in helping the team compete for trophies.
"I’m learning all the time from the best manager in the game and I’m keen for that to continue alongside the world class players in the squad."