Morrison joined the Royals form Swindon Town in 2011 but is yet to make a league appearance for the club, instead featuring just twice in the League Cup. Since arriving at the Majedski Stadium the 21-year-old has spent most of his time on loan at Huddersfield helping them to secure promotion to the Championship in May.
The former Robins defender impressed during his loan spell at the John Smith's Stadium and hopes to establish himself in the senior squad after catching the eye in the Berkshire side's League Cup victory over Charlton.
He told the club's official website "It’s always nice to sign a new deal, now I’ve got to push on and show all the Reading fans what I can do."
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Brian Mcdermott was full of praise for his young defender believing he will develop into a quality player for his side in the future.
"Sean is a player who went out on loan and did really well for us he’s got the tools to work at his game and be a really good centre half," he said.
"If he keeps working and keeps doing what he’s doing he’ll be a very, very good defender. I’m sure he will be."