The 20-year-old has played in Villa's last three games and is highly-rated within the corridors of Villa Park.
Edwards' new deal will keep him at the club until the summer of 2005 and he joins the likes of Stefan Moore, Liam Ridgewell and Peter Whittingham in extending his stay.
Meanwhile, Villa's new signing Mika Aaritalo has revealed he turned the chance to move to Arsenal or Liverpool to sign for Villa.
The Finnish striker decided to sign for Graham Taylor's troops as he feels he will have a better chance of first-team football rather that moving to a bigger club.
"It's like a dream come true. I agreed to sign in October and I've had a long wait before finally joining," said Aaritalo.
"My first game was the draw with Leeds earlier this season and I saw enough then to convince me that I wanted to sign for Villa.
"I could have signed for other Premiership clubs, maybe Liverpool, maybe Arsenal, but this was the best option for me.
"The Villa squad is not that big, so there is a chance to progress."
Taylor has been impressed by the 17-year-old and is expecting big things from him.
"Mika is a very talented boy. He has things in his make-up that you'd be trying to teach others at his age, and has a very, very good left foot."
