Justham has put pen to paper on a new two-year deal to keep him at Kenilworth Road until 2017.
The 24-year-old has been in excellent form since an injury to Mark Tyler presented him with the opportunity to make his Football League debut against AFC Wimbledon in February.
Justham, who joined the Hatters from East Thurrock in the summer of 2013, has played the last 13 games for John Still’s side and kept three clean sheets in his last four matches.
“The one positive from our run of bad form was Elliot’s performances,” Luton boss Still told the club’s official website.
“He has come in and proven how good he is both on and off the pitch. He’s showed us all why we brought him to this football club in the first place.
“Mark Tyler might have been out injured but Elliot has grabbed his opportunity with both hands and hasn’t looked back.
“It’s great to be able to have two goalkeepers of their ability challenging for the number one spot – and I mean that, because now Elliot’s had a taste of it he won’t want to give up his position, whether he’s friends with Mark or not.”