Milner, 33, joined the club on a free transfer from Manchester City back in 2015, the former England global has agreed on fresh terms with the Reds with his previous contract expiring at the end of the season.
North London giants Arsenal have a very good opportunity to build on their first win in eight games in the Premier League when they welcome champions Manchester City to the Emirates Stadium in the standout match for week 17 fixtures.
"He has showed he is a world-class manager, if not the best in the world", he told the club's official website.
"Obviously the gaffer waited to sign his dependent on whether I signed mine, so that makes me a feel bit more important!" he joked.
"With Brexit and stuff like this then things will change, and for the youth departments as well - where can we get the players from?"
"Obviously winning a trophy a year ago, it's easy to sit back or take your foot off the gas, and we've gone the other way", said Milner.
"This is the way we can talk about everything, but we need to stop playing, not put more".
In a joint statement, principal owner John W. Henry, chairman Tom Werner and FSG president Michael Gordon, said: "We are absolutely delighted we have been able to reach an agreement with Jürgen - as well as Peter and Pep - on extending their time with the club".
"Like I said, there's a long, long way to go, but we'll keep striving to keep improving and getting success for this club".
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