Edwards will continue to fulfil the role of Assistant Coach in charge of defence he began before Wales's 2008 RBS Six Nations Grand Slam success.
The new contract secures his relationship with Wales beyond the original two-year arrangement that was agreed last year.
Edwards confirmed the new deal by signing the contract along with the Group Chief Executive of the WRU Group, Roger Lewis.
Edwards, the 41-year-old former Rugby League international who travels to South Africa with Wales for their two-match summer tour in June, said: "I am delighted that this deal secures my future with Wales until 2011.
"We have won the Grand Slam, but now it is time to focus on preparing to face the world champions and what a great challenge that is for us.
"I am extremely grateful to the managements of both Wasps and the Welsh Rugby Union for giving me this opportunity to work with these two marvellous teams.
"I can now focus all my energy on achieving a lot more success with both teams on the field where it matters most.
"My loyalty to Wasps is undiminished and I have already formed an extremely close bond with the Welsh team and the Welsh fans. There has been a lot of speculation about my future, but I feel very excited about working with my co-coaches and back room staff within the Welsh set-up.
"The Welsh squad has been great, fast to learn and have given everything asked of them even though that has sometimes been painful.
"There is still a lot of work to be done with the Wales squad, but they are a talented group of players and I am looking forward to the future."
WRU Group Chief Executive Roger Lewis said: "This is an important day for Wales. We are assembling a formidable array of talent to ensure we re-position Welsh rugby at the forefront of the global game.
"Shaun Edwards, in a remarkably short space of time, has gained a unique place within Welsh rugby. Shaun thoroughly deserves his fast growing worldwide rugby reputation as an outstanding coach.
"He has the capacity, attitude and integrity to make a huge difference to the teams he works with and the focus he brings to his task is legendary.
"We have a formidable coaching team in place under Warren Gatland and they know exactly what needs to be done to achieve the best from this current team.
"This contract with Shaun ensures he and Warren can work and plan towards goals which can be realised through to the next World Cup and that is an exciting prospect for the whole of Welsh rugby."
SHAUN EDWARDS BIOGRAPHY
Shaun Edwards was born in Wigan on 18 October, 1966, and followed his father, Jack, into Rugby League. His dad was a successful half-back with Warrington and Shaun signed for Wigan for £35,000 on his 17th birthday having captained England Schools Under 16 in both Rugby Union and Rugby League.
He led the England Schools to victory by 13-12 in an Under 16 international at Bristol in 1983 against a Welsh side containing Dai Young. The two later met up at the 1995 Rugby League World Cup, when Edwards captained England in their opening win over Australia and Young played throughout Wales' run to the semi-finals.
Shaun made 467 appearances for Wigan, scoring 1,140 points. He won the Challenge Cup eight seasons in a row with the club and nine times all told. He also won eight Championship titles with Wigan. He was the youngest player to play in a Challenge Cup final and the youngest to be capped by Great Britain.
He played 36 times for Great Britain, scoring 16 tries, and played in the 1992 and 1995 World Cups with England. He also played professionally for Balmain Tigers, in Australia, London Broncos and Bradford Bulls.
Recently voted the fourth best British Rugby League player of all-time, he returned to Rugby Union in 2002 when he became backs coach at London Wasps. Nigel Melville was Director of Rugby at the club at the time and Shaun struck up a winning partnership with Warren Gatland. Wasps went on to win six trophies in three seasons with Gatland and Edwards at the coaching helm, including the European Challenge Cup in 2003 and the Heineken Cup in 2004.
He is currently in his third season as Head Coach at Wasps, working under Director of Rugby, Ian McGeechan, and has added a second Heineken Cup triumph to his tally since Gatland's departure.