The deal, announced Wednesday, gives the veteran striker security for the rest of this Major League Soccer season but keeps his options open for next year. For the Whitecaps, they can count on their designated player's services as they battle for the playoffs, then evaluate if he fits into the team's long-range plans.
"It works for both parties," Miller told reporters.
Head coach Martin Rennie said the deal avoids a major distraction for the Whitecaps.
"We were in a position where we could have lost a really valuable part of our team and we didn't want to do that," Rennie said.
"We've got ourselves in a position now where we know we've got him right through at least until the end of the season. It gives us continuity. It gives us a chance to keep building on the group we have."
Under soccer rules, a player with six months left on his contract with one team can negotiate a deal with another club. Part of that new contract could be a transfer fee to release him early from his current team.
Rangers FC in Glasgow, Scotland, were among several teams that had shown interest in Miller. The 33-year-old Edinburgh native played for Rangers in 2000 and returned for three more seasons in 2008. During that stretch he scored 49 goals in 81 matches.
Miller's current deal with the Whitecaps expired in December. The extension runs through June 2014.
"It allows me to do what I should be concentrating on . . . which is we should get in the playoffs and have a successful end to the season," Miller said. "Hopefully the team will continue this good form and personally I can maintain that as well and get even better.
"What it does is it gets everything settled between now and the end of the season. At the end of the season is far better to evaluate things, whether it be for a player to evaluate a position at a club or for management and coaches to evaluate their squad."
Terms of the extension were not released. The Major League Soccer Players Union website says Miller's guaranteed compensation for 2013 was US$1,132,492.00.
The Whitecaps are fourth in the Western Conference with 32 points (9-6-5).
Hampered by a hamstring injury early in the season, Miller has six goals in the 12 games he's played for the Whitecaps. Named the Week 16 player of the week, the five-foot-10 striker is tied for the second most game-winning goals in the league this season with four. Vancouver is 8-2-1 with Miller in the starting lineup.
The Scottish International signed last July 16. He has started 20 of his 26 appearances in Vancouver and scored eight goals. As a designated player, just US$368,750 of Miller's salary counts against the MLS salary cap of US$2.950 million.
Miller has made 69 appearances for Scotland and scored 17 goals. During his career he's won the Scottish Premier League, Scottish FA Cup, and Scottish League Cup with Rangers and Celtic.
Miller hinted he would be happy to stay in Vancouver.
"If there was a longer contract on the table we would be attending that," he said.
Come the new year Miller will again be in a position to talk with other clubs.
Whitecaps FC president Bob Lenarduzzi said negotiating another contract with Miller will be easier when the team has a better understanding of what its needs might be in 2014.
"I think we are going to allow for the process to run its course," Lenarduzzi said. "I would suggest we will be sitting down with him to discuss next year. It's an option that suits his needs."
The Whitecaps will likely have several players looking for salary increases. That could impact what the Whitecaps can offer Miller for 2014.
"What we need to do is look at how we manage our cap for next year," said Lenarduzzi. "We're at the max on it. Any movements that take place now will likely be more minor movements.
"We need to keep our options open as far as that number, determine what type of player do we need to be recruiting for next year. That could be Kenny. Not having the ability to assess at the end of the season would have bound us and may have bound us to the point we may be missing out on upgrading on other positions."