Roger Lewis said: "Stephen is a great player and a great Scarlet so I am delighted he is staying to play his rugby here. The team will benefit from his talent and experience, the supporters will benefit from watching him in action and Welsh rugby will benefit from having him here.
"Everyone now knows we are concerned about the playing location of our internationals and the effect this will have on selection decisions. Player location is an important factor for a variety of reasons and we to develop a structure and system which aligns to the needs of our regions and the senior international side.
"Having Stephen here in the Welsh fold makes him front of thought for our coaching team and will help boost the competition for the Wales jersey. I know how hard the Scarlets have worked to keep Stephen in Wales and his decision to stay is a powerful reflection of all the positive work they are involved in to sustain and develop elite rugby in south west Wales."
Wales Head Coach Warren Gatland added: "This is pleasing news, having Stephen close to base camp in the coming years can only be beneficial to the Welsh game and to the prospects of our national team."