The central defender was the subject of a deadline-day offer from former club Hereford, which Albion have firmly turned down.
James has made 26 appearances for the Brewers this season and boss Paul Peschisolido sees the experienced 33 year old as an influential figure at the Pirelli Stadium.
"Tony has been a huge part of what we are trying to achieve this season. I am delighted that we have agreed to keep him at the club beyond this season,