The 26-year-old second rower joined Widnes on a 12-month deal from Bradford Bulls when the Yorkshire club folded in the winter, with an option for a second season.
"I've really enjoyed my first year at Widnes Vikings," said Olbison, who has made 18 appearances so far. "It's been a great experience to play regular top-level rugby and I feel like I have developed well as a player here.
"I'm really pleased to have this opportunity to extend my stay and I'm looking forward to what we can achieve going forward."
Widnes coach Denis Betts said: "Tom came here with the ambition of building a career in the Betfred Super League and he was proven himself at this level.
"He has settled in well and made a good contribution to the team this year. I am very pleased that he has chosen to sign this new deal and look forward to continuing to work with him."