The former Liverpool trainee initially joined Andy King's side on a free transfer following a trial with the Wiltshire-based outfit last summer.
The 20-year-old has impressed at left back with The Robins and it is those performances that have earned him a contract until June of 2006.
Nicholas was delighted to secure a contract for the next two-and-a-half years with the Second Division club.
"It is great news. I came in the summer and signed a one-year deal, but to have signed the two-year extension is brilliant for me," the defender told Swindon's official website.
