The Thai driver had been linked with Mercedes following Lewis Hamilton's move to Ferrari for 2025 and also a return to Red Bull.
But instead he has decided to stay with Williams, after winning 27 of their 28 points in the 2023 drivers' championship as the team finished seventh place in the Constructors' Championship -- their best placing since 2017.
Albon, however, has yet to win a point from this season's opening six races.
"I'm incredibly happy to be remaining with Williams Racing and to continue working with such a talented and dedicated team of people," said Albon in a Williams statement.
"It has been a difficult start to the year, but since joining Williams we have made significant progress together and I have seen the huge changes happening behind the scenes to take us back to the front of the grid.
"This is a long-term project that I really believe in and want to play a key role in which is why I have signed a multi-year contract. The journey will take time but I am confident we are building the right team to move forward and achieve great things in the years to come."
Williams did not specify the length of Albon's new deal but said the renewed agreement with the 28-year-old, who was born on London, would take "the partnership into the new era of Formula One regulations and demonstrates a shared belief in the upward trajectory of the team".
Williams' statement added: "Since joining Williams Racing, Alex Albon has showcased exceptional determination and dedication both on and off the track.
"His performance since he joined ahead of the 2022 FIA Formula 1 World Championship has been integral to the team's progress and success, and his efforts significantly contributed to the team's best championship finishing position since 2017 of seventh last year."
