Raikkonen, the 2007 world champion, re-joined Ferrari at the start of the year but mediocre form had led to rumours the Formula One giants were exploring other options.
Ferrari president Sergio Marchionne said earlier in the summer Raikkonen's future lay in his own hands, which was interpreted as a clear signal for the Finn to make improvements amid what has been a mediocre start to his second spell with the Italians.
However on Wednesday Ferrari released a brief statement which said the "technical and racing agreement" they had with Raikkonen was being renewed.
Hamilton's Mercedes team-mate Nico Rosberg is second on 181, with Raikkonen down in fifth place on only 76 points.
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Raikkonen admitted he has been given a fresh opportunity to show he is committed to the Ferrari cause.
"What can I say? For me, to be able to stay another year at Ferrari means that the dream goes on," he said in a team statement.
"The Scuderia is my family, as I always said, it's here I want to end my career.
Ferrari signed Vettel at the start of the year in a bid to put th brakes on several years of underperforming and seeing Red Bull dominate the sport.
While Vettel has remained competitive so far this season, new team principal Maurizio Arrivabene said he expected Raikkonen to repay the confidence the team have shown in him.
"We believe that extending Kimi's contract into the next season will provide further stability to the team," said Arrivabene.
"This has been our guideline, also considering the very good relationship between Kimi and Seb.