The 49-year-old would guide the All Whites through the qualifying rounds for the 2014 World Cup in Brazil in conjunction with his regular coaching job at Wellington Phoenix in Australia's top-flight A-League, he told reporters on Tuesday.
"New Zealand Football are happy to continue on with the partnership with Wellington Phoenix and the national team and I've agreed to continue on for the next period for the World Cup," Herbert told New Zealand television.
Herbert, whose team won many admirers in South Africa after bowing out at the group stage undefeated with draws against champions Italy, Paraguay and Slovakia, had committed to both posts for three years after turning down offers from overseas.
He was among the lowest-paid managers at the World Cup, his annual salary of NZ$50,000 ($36,000) a quarter of his club pay, according to one New Zealand newspaper.
The 78th-ranked All Whites' appearance in South Africa after a long qualification drought has seen football explode in the traditionally rugby-dominated nation.
Herbert, who took over the New Zealand job in 2005, said one factor in his decision to stay on was out of concern that too much change could stall that momentum, as had happened after the side's only other World Cup appearance in 1982.
"I'm certainly looking forward to building the brand even more," said Herbert, a defender in the 1982 squad. "(I've) got a strong memory in my mind when there was a whole raft of changes at the top and then of course, the major collapse.
"Again, it was part of my decision... to take what we've created needs to continue."
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