The regional Inter-Governmental Authority on Development (IGAD) chief mediator, Lazaro Sumbeiywo, said on Friday the two-month extension signalled a peace deal was close.
"It is because we anticipate that we will have a comprehensive peace agreement by the end of the year. That is why we are signing for two months and not the traditional three months," said Sumbeiywo.
He made his comments during a signing ceremony between SPLA spokesman Samson Kwaje and the Sudanese ambassador to Kenya, Ali Abd al-Rahman Nimeri.
"We hope to have a complete ceasefire by the end of January," Sumbeiywo said, adding IGAD had managed to deploy the Verification and Monitoring Team (VMT) in areas that were prone to attacks.
The ceasefire, which was renewed for three months last September, was due to expire on 30 November.
The chief mediator said he had received reports of two violations from both sides, but investigations could not establish the truth behind alleged troop movements.
Leader of rebel SPLA John Garang
will join talks on 5 December
"It is important that whenever we sign an agreement, it is implemented," Sumbeiywo told both sides, but commended them for having managed to "maintain the cessation of hostilities in the Sudan".
Nimeri and Kwaje welcomed the extension and pledged their commitment to reach a final peace settlement by the end of the year.
"We are in a stage of preparing for peace," Nimeri said.
The SPLA rebels have fought government forces since 1983 to end domination of the south by the north.
The war has killed at least 1.5 million people and displaced more than four million others.
Both sides are due to resume peace talks in Kenya from 30 November, amid heightened expectations and repeated promises that a final peace accord will be reached by the end of the year.
"From Sunday, high-level political delegation from both sides will meet to discuss the outstanding issues, power and wealth-sharing, and the three conflict region of Nuba Mountains, Southern Blue Nile and Abyei - to prepare options for the principals to make decisions," Sumbeiywo said.