The Uruguayan put pen to paper on an improved deal on Tuesday afternoon and this was followed by an announcement by the club.
The news came just 24 hours after Suarez teamed up with new manager Brendan Rodgers for the first time at training following Uruguay’s exit from the Olympics at the group stage.
"To sign a new contract with Liverpool is unbelievable for me because I am so happy here at both the club and also in the city. That is very important for me," Suarez told the club's official website.
"When you are a kid, everybody wants to play for Liverpool. I am here now and it is a dream for me, and now I am a Liverpool fan.
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"I am happy off the pitch because the people of Liverpool are good with me and my family. I try my best on the pitch and when you are happy off the pitch, you are happy on the pitch.
"I want to say thank you to the fans because they are our 12th player. The supporters of Liverpool are unbelievable. Five or six years ago I watched on TV the stadium and the club, and now I play here and the supporters have helped me. That's very important for me."
Suarez signed a five-and-a-half year contract when he joined Liverpool from Ajax in January 2011 but his new agreement is expected to bring his pay in line with the club’s highest earners such as Steven Gerrard, Pepe Reina and Glen Johnson.
Footage emerged shortly after 14:00BST on Tuesday of the club's TV channel appearing to accidentally broadcast news that the Uruguayan had signed a new deal.
The 'LFC Now - 60 second news' bulletin led with the words: "Liverpool today confirmed Luis Suarez has signed a new long-term contract with the club.
"The Uruguayan forward committed his future to the Reds by putting pen to paper on a deal on Tuesday afternoon.
"Following his involvement at the Olympics with Uruguay, Suarez returned to Melwood on..."
The broadcast then halted, revealing a holding screen apologising for a temporary fault.
Liverpool sources claimed that the footage was premature and that Suarez had not actually signed the fresh terms at this point, although the club went on to confirm the Uruguayan's new deal four hours later.Follow Wayne Veysey on