Webb's three-year deal will keep him at the Welsh region until 2016, the Ospreys announced.
The 24-year-old has won three Wales caps, making his debut in last season's RBS 6 Nations game against Italy.
He also featured against the Barbarians and during Wales' second Test defeat in Australia last summer. Webb was also a member of Wales' 2009 World Cup-winning sevens squad.
"I am absolutely thrilled," he said.
"To be able to commit to another three years with my home region is fantastic. It's a brilliant environment here - the only place I want to play rugby."