Sydney FC chairman Scott Barlow confirmed Farina would stay at the club until at least the 2014/15 season, having first joined as an interim coach in November.
"Frank has done an outstanding job since arriving at Sydney three months ago," Barlow said.
"I and the board and (chief executive) Tony (Pignata) are very confident that the positive impact he's had in such a short period of time will continue into next season.
"There's no question that Frank's immediate focus continues to be the seven games ahead of us (in the 2012/13 season), and on qualifying for the finals series.
"But also, by making this appointment now, we're well positioned to accelerate and progress some of our player recruitment decisions for next season."
Farina thanked the club for throwing him a "football lifeline", three years after being sacked as Brisbane Roar coach for drink-driving.
"When I got the phone call in Papua New Guinea, realising it was Sydney FC, it was a no brainer to accept the challenge," Farina said.
"For the owners, the board and the chairman to show this faith after three months ... it's a great privilege and an honour to accept it.
"But as the chairman said, my immediate focus is the next seven games - in particular, the next game against Adelaide."
The 48-year-old took over after Ian Crook stepped down.
In that time, Farina has taken the Sky Blues from the bottom of the ladder and into the top six ahead of Saturday's clash with Adelaide.
Sydney have five wins, three draws and four losses since Farina took the helm.
The former Socceroos coach has quickly made an impact on the squad, signing Joel Griffiths, Tiago Calvano and Jarrod Kyle, as well as releasing Jason Culina after clashing with him at training.
It is Farina's first permanent A-League coaching deal since parting ways with the Roar.
He has since worked as coach of Papua New Guinea and a technical director of the Oceania Football Confederation.