Ephraim's initial month-long stay at London Road was set to expire on Friday but the midfielder has agreed to remain with the Sky Bet League One promotion hopefuls until January 29, 2014.
The 25-year-old has been a regular in the Posh team since making the switch to Darren Ferguson's side, making six appearances in all competitions.
He will be available for Peterborough's FA Cup second-round tie against Tranmere on Saturday.
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- Darren Ferguson