Negotiations came to an end between the club and the Finnish international goalkeeper, with both sides extremly happy with the deal.
Niemi has extended his current contract by a year taking it up to June 2008. By doing so, the 32 year old has practically doubled his wage, a just reward for the fantastic performances he has made since his arrival.
Niemi's agent, Richard Cody, said: "We're over the moon. Rupert and myself had different ideas to start with but in the end we have come to an agreement which is excellent for everyone.
"Once I understood where Rupert was coming from, in terms of wanting to protect Southampton, the relationship between us was fine."
"When you look at what Rupert has done in terms of the turnover and the type of wages he pays now compared to when he first came to the club, it's remarkable," said Cody.
"Antti is now paid on a par with the top keepers in the country and this new deal shows his commitment to Southampton, where he is very likely to finish his career now.
"I'm sure Antti could play until he was 40 like Peter Shilton and Dave Beasant did.
"I wanted what was best for Antti Niemi but I have to say it was a pleasure to deal with Rupert in the end."
Niemi is delighted to be able to finally settle in one area after spells with Hearts adn Rangers. "I have been thinking about this for a very long time,. I am very settled in the area and so is my family," said Antii
"There are a lot of factors to consider in a footballer's decision that people might not think about.
"As I said, my family is settled and that's very important for me. I know some people will think I'm motivated by money but there are lots of reasons for my decision.
"Southampton are going forward all the time as a club and the chairman does not pay stupid wages.
"I can see us being a top-six club in a few years time.
"My new contract takes me through to when I'm 36 and it's likely I could go back to Finland then."
"I am delighted to have it all sorted out. It has taken a while which was slightly frustrating but that is often the way.
"While we footballers are having a break, summer is a very busy time for everyone else at the club. "But I am very pleased it has all been resolved and to be staying here because I never wanted to leave."
Niemi also mentioned some other factors in his decision to stay, namely the fans and coach David Coles. "The supporters are wonderful and they had a big influence on my decision to sign.
"They were fantastic on the last day of the season at Charlton when they dressed up in tribute to me - even though I was injured.
"They are one of the reasons I am so happy here - and another is the goalkeeping coach David Coles. You have to give a lot of credit to the people behind the scenes here and it is a good feeling to wake up and look forward to going into work. It is great to have someone behind me that wants the best for me and his coaching is excellent, it is worth a few thousand a week.
Chairman Rupert Lowe added: "Antti is a top-class keeper and we are delighted to have him. He has been outstanding for us in the past two seasons. We always said we would reward performance and we have kept that promise. I am glad it has all been done now but that was always going to be the case.
Once again, Rupert lamented over the fans ability to believe everything they read in the papers. "Supporters need to trust us to sort things out rather than believing everything they read in the press. "That only creates needless panic and dissent. But as they say, empty vessels make the most noise!"