The government will provide £4.3 million to fund a “vital” air link between City of Derry airport and Stansted.
The two-year extension, which starts on April 1, will enable Loganair to continue operating 13 return flights a week.
The route is jointly funded by the Department for Transport and the Northern Ireland Department for the Economy.
Aviation minister Robert Courts said: “Regional connectivity is at the heart of our plans to build back better after the coronavirus pandemic, and the agreement secured today is a vital step towards this.
“The route will provide vital connectivity from Northern Ireland to the capital, supporting economies on both sides, and helping us deliver on our commitments to level up across the UK.”