The 30-year-old Australia international was due to come out of contract at season's end but has penned a deal that will see him remain in Perth until the end of the 2015/16 A-League season.
Thwaite is the fifth Glory player to re-commit to the club after Danny Vukovic, Scott Jamieson, Brandon O'Neill and Sidnei Sciola signed new contracts.
"I consider myself very lucky to sign another two years at probably the most traditional clubs in the A-League, so it's an honour to extend my stay here," Thwaite said.
"It's pretty much business as usual for myself. My family obviously enjoys the Perth lifestyle which is a big part of any footballers' career, but on the pitch it's business as usual."
Thwaite, a mainstay in Glory's defence since his arrival from the now defunct Gold Coast United in 2012, has scored once in his nine appearances this season.
Perth sit seventh in the table, 14 points adrift of league-leading Brisbane Roar.
The Socceroo is already playing under his third coach in Perth after the Glory controversially sacked Alistair Edwards, who was involved in a bitter feud with club captain Jacob Burns and a number of senior players.
Thwaite was rumoured to be one of the players involved in the revolt against Edwards but he says it is onwards and upwards at nib Stadium since Kenny Lowe's arrival as caretaker coach.
"Sometimes when problems occur you think a bit narrow minded," he added.
"You think the whole world revolves around you but in reality life's going on around you and I guess we have to dismiss that tunnel vision view and start opening our minds to the positives that are happening."
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