It is the third contract Elliott has signed with Liverpool in just over three years, after joining from Fulham in 2019 and then getting an extended deal 13 months ago.
But a pay rise reflects their policy of giving improved and long-term contracts to players who they have impressed and who they want to tie down.
Elliott said: “It’s always nice to know that I’m going to be here for many more years, which is always a great thing with it being my boyhood club and there is nothing in this world that makes me more happy and more excited than this.
“There is no better place in this world to be than playing for Liverpool and to put the shirt on and go out and play. I’m hoping there are many more memories to come.”
Elliott has only made four league starts for Liverpool but excelled at the start of last season before suffering a dislocated ankle in September’s win at Leeds and has begun the current campaign well, with an influential cameo as they came from behind to earn a point at Fulham on Saturday.
Manager Jurgen Klopp has said he is reluctant to sign another midfielder because he wants to give chances to the youthful trio of Fabio Carvalho, Curtis Jones and Elliott. The England Under-21 international, who joined Liverpool as a winger, is seen as an option in the front three and on the right of a midfield trio.
Elliott became the youngest Premier League player during his time at Fulham and impressed Liverpool with his maturity and professionalism during his recovery from injury last year.
Liverpool gave Diogo Jota a five-year deal last week, when he had three seasons remaining on his previous contract, while Joe Gomez and Mohamed Salah have also put pen to paper to extend their stays at Anfield this summer.
Gomez, Jota and Elliott are part of a group contracted to 2027, including Alisson, January buy Luis Diaz and summer signings Carvalho and Calvin Ramsay, while Darwin Nunez has a deal until 2028.