The Newcastle centre-back linked up with Kenny Jackett’s side in October on a one-month loan deal, and has made three appearances so far.
Williamson was due to return to St James’ Park, but has now seen his temporary spell extended until 16th January 2016.
Wolves have conceded just once in Williamson’s three games and will be hoping the defender’s experience can see them rise up the Championship table, with the club currently sitting in 14th.
Williamson joined Newcastle in 2010 from Portsmouth and has gone on to make 169 appearances in total for the Magpies.
However, the 32-year-old has found game time hard to come by under new boss Steve McClaren this season, making just two appearances in the Capital One Cup.
But Wolves manager Kenny Jackett is delighted to have retained Williamson’s services ahead of a tough winter run, telling the club’s official website: “We are delighted that the deal has been extended and that Mike will be with us through a very busy December and Christmas period.
“Mike will give us some real competition and allow us to take our time with the players coming back.
“He has brought a lot of experience and physical presence to the back four and to the club, and has helped the players around him at a time when we have had a number of injuries to centre backs.”