The 25-year-old has scored 139 runs in his five NatWest T20 Blast matches after arriving to the county for the second half of the season with an average of 63.66 in four Specsavers County Championship games.
Latham is likely to miss Durham’s final Division Two matches of the campaign as he prepares for New Zealand’s ODI and T20 series which is to be held in India but will make a return to Chester-le-Street for the rest of the 2018 tournament.
Durham head coach Jon Lewis is delighted with the signing and is hopeful that the club will be benefitted by the player’s return.
“Tom has made a fantastic contribution on and off the field during his time here at Durham,” said Lewis.
“His performances with the bat have been excellent and he is a big influence in the dressing room.
“Myself and the players are delighted that he will be returning for the entire 2018 campaign”.
Latham has scored more than 5,000 first-class runs at an average of 41.90, and will be available in all formats for the Riverside club.