The Otago Rugby Football Union yesterday announced Thomson had re-signed with the union until the end of the 2010 season.
Assuming he remains in favour with the All Black selectors, Thomson will play few games for Otago over the next two years, so his provincial contract is essentially about keeping him in Dunedin to play for the Highlanders.
He conceded his faith in Otago had been tested by the province's dismal run in the Air New Zealand Cup.
"It probably made it a bit more difficult.
''It's been hard watching from afar to see the performances each week," Thomson said.
"But it's nothing that can't be remedied.
''The guys at that level know they have to dig in and find the answers."
Thomson (26) fielded offers from other unions - it is understood Wellington was particularly keen to get the versatile flanker - but he decided it wasn't the right time to leave Dunedin.
"It feels right to stay in Otago.
''I'm happy here and I enjoy living here.
"I felt there was some unfinished business with the Highlanders.
''If we can keep a good core of players together and build on last season, we can move up."
Thomson, who played in seven tests this year, is also contracted to the New Zealand Rugby Union until 2010.
He is set to play openside flanker for Otago in its final game against Wellington at Carisbrook on Saturday night.
Thomson's re-signing comes days after wing Fetu'u Vainikolo and lock Tom Donnelly signed with Otago until the end of the 2010 season.
