Phipps aims for third World Cup
Phipps, 28, re-signed until the end of 2019.
"The Wallabies squad is continuing to grow and I want to be playing some good footy for the Tahs so that I'll have the best chance to run out in the gold jersey later this year," the 52-Test veteran said.
"New South Wales is where I was born and where I grew up.
"It means a lot to me, as it does to a lot of the boys in the team, to pull on the Waratahs jersey and represent our home state," Phipps added.
"The season ahead is really exciting. We've got a good mix of players, new energy and experienced leaders, so I'm looking forward to continue to come together as a team and see where we can go.
"I'm also really excited at the opportunity to potentially represent my country again this season. I really enjoyed the environment of the squad last year, especially the experience of bringing up my 50th cap on the Spring Tour.
"The Wallabies squad is continuing to grow and I want to be playing some good footy for the Tahs so that I'll have the best chance to run out in the Gold jersey later this year."
He played in 13 of the 15 Wallabies Tests in 2016, sharing the No.9 jersey with Will Genia.
"He played his 50th cap last year and he's just coming into his prime years as a rugby player so his best is yet to come," Wallabies coach Michael Cheika said.
"Nick's dedication to both New South Wales and Australia has been outstanding over the last five years. That is why we were so keen for him to stay and play his rugby in Australia.
"That's what this decision is about, playing the best rugby of his career in Australia and for Australia."
The next World Cup will be held from September 20 to November 2, 2019.
The Wallabies have played a significant role in the Phipps household, with Nick the third member of his family to pull on the Gold jersey after both his grandfather and great-uncle represented Australia.
The Sydney University product also starred for Australia on the World Sevens Series circuit and has a Commonwealth Games Silver medal from Delhi 2010.
Phipps is the second player in as many weeks to commit to the Tahs for a further two seasons, joining lock Ned Hanigan.
The 28-year-old first joined the Tahs at the start of 2014, returning to his home state of NSW after his first three years in professional rugby with the Melbourne Rebels.
Since then his rugby career has skyrocketed, becoming a mainstay for both the Waratahs and Wallabies. With 97 Super Rugby caps to his name, the skilled scrumhalf is well on his way to running out for his 100th game in the tournament this year, after earning his 50th caps for both his country and state in 2016.
