Liverpool owners Fenway Sports Group have appointed Kenny Dalglish as first-team manager on a three-year contract.
The decision follows a run of 33 points in 16 Barclays Premier League games since Dalglish was put in temporary charge after the sacking of Roy Hodgson in January.
Liverpool currently sit fifth in the league, in pole position for a spot in next season's Europa League and, as expected, the 60-year-old has been rewarded for his exploits with a full-time deal.
"Kenny is a legendary Liverpool figure both as a supremely gifted footballer and successful manager," said principal Liverpool owner John Henry.
"Since returning in January he has shown extraordinary leadership and the ability to bring the best out of so many people associated with the Club.
"It was obvious to us very early on that the atmosphere surrounding the Club had been transformed by his presence. No one else could have produced such a response.
"Therefore, I'm delighted we have agreed to a new contract. We didn't need nor want to look elsewhere for the right man to manage the team."
Dalglish said: "I said when I took the job on in January that I was just happy to help the Club out for the remainder of the season.
"Now the owners have decided in their wisdom that they want me to stay a little longer and it's fantastic news for both myself and Steve Clarke that we have signed these contracts.
"I want to salute the efforts of all the players as they have been fantastic and thank everyone at the Club for the welcome they have given me since I returned in January."