The versatile midfielder/defender has been a key member of manager Steve McMahon's squad this season, having made 29 appearances in the current campaign for The Seasiders.
The 21-year-old's deal has also been given the option for a further two years, should Coid decide to stay on even longer with the Division Two side.
"I am pleased to have signed. I can now concentrate on my football. I never wanted to leave and I am delighted to have everything sorted," Coid told the club's official website.
Coid's signing may be coupled with the news that midfielder John Hills has been offered new contract terms, after initially rejecting the club's previous contract offer.
The 24-year-old's decision last month lead to the assumption that Hills would be moving on from Bloomfield Road in the summer.
However, Blackpool chairman Karl Oyston has revealed that new terms have been offered to the player and that he may sign this week.
"We have made John a new offer and we are confident he will put pen-to-paper on Thursday," Oyston told BBC Radio Lancashire.
