"We've been talking about it for a while and I'm glad to get it out of the way so I can concentrate on the rest of the season," he told BBC Berkshire.
"Reading are a fantastic club and I enjoy working with them everyday, it's the major reason why I signed."
The Australian international became Reading's number one after Marcus Hahnemann left the club for Wolves in 2009.
"I've worked very hard to get into this position, playing is everything to me," Federici added.
"I'm a much better goalie than I was a few years ago and I've got a good 15 years left in me yet, so I hope to keep on improving."
The Royals, who beat West Brom in the FA Cup third round last weekend, lie eighth in the Championship table and visit Doncaster Rovers on Saturday knowing a win could take them into the play-off places.
"We want to push on now. Doncaster are a tough team and they are a good passing football team as well," said Federici.
"It's always difficult up there but we are looking forward to it, especially coming off of the cup win at the weekend, and it will be a terrific game for the fans to watch."
Source: BBC Sport