The 19-year-old, who has scored two goals in nine appearances for the club, inked a long-term deal last August.
He is primed for more minutes in midfield with Adam Lallana departing at the end of the season, but Liverpool have fielded several loan requests for the youngster stretching back to last summer.
The fresh terms extends Jones’ association with the club from joining the Academy at Under-9 level.
“For me, as everyone knows, it’s massive,” he told Liverpool’s official website.
“It’s my boyhood club and it’s the whole of my family’s club as well, so for me it’s huge.
“I think the environment and stuff is all positive and keeps me as positive as I can. Of course, we’re working with a great manager and around the best team in the world, so for me it was easy and [I’m] extremely proud.”
Jones made his Premier League debut as a substitute in Liverpool’s 3-0 win at Bournemouth in December before lacing a stunning long-range effort to decide an FA Cup third-round tie with Everton at Anfield.
He has also impressed while captaining the club’s U23 and U19 sides this season.
Jurgen Klopp is eager to progress the development his standout youngsters, with Neco Williams and Harvey Elliott also falling into that category, but warned he will not be handing out undeserved appearances.
“They will not play just because I want to see them in a Premier League game,” he said.
“We want to win and to win football games the best players have to be on the pitch.
“If the young boys are part of these best players then they will be on the pitch – but we won’t give them Premier League matches just for fun. They cannot be handed out like sweets.”