Howard joined the Merseyside club with his Old Trafford future in doubt.

But his form for the Toffees prompted United manager Sir Alex Ferguson to discuss bringing him back when his loan ended.

However, United have new England international Ben Foster - on loan to Watford - and Polish keeper Tomasz Kuszczak as back-up to Edwin van der Sar.

Howard's new deal will start from the beginning of next season and run until 2012, with the current loan continuing for the rest of the campaign.

United paid 2.3 million pounds for the 27-year-old from New York/New Jersey Metrostars in July 2003 and he played 77 games for them before moving to Everton this pre-season.

He has since made 27 appearances for Everton, including an impressive 11 clean sheets.

"The club share my ambition, that is for sure, the manager does and so do the fans," Howard told evertontv. "I was drawn to the club for a number of reasons and the players in the dressing room are one of them."

Everton manager David Moyes said: "We are delighted to have signed Tim on a permanent basis. He has come in this season and proved he is a good keeper and we are pleased to have secured him."

Howard has won 16 international caps for the United States, the most recent in the 2-0 win over Mexico last week.