Waldouck, whose new deal will expire in 2009, only made his first team debut five months ago, but has now become an integral part of the Wasps line-up. He showed a man of the match winning performance in London Wasps 28-0 win over Bristol at the weekend.
Waldouck, 19, is a product of the Wasps academy system, and has represented England at under-16 and under-19 levels.
Wasps rugby director Ian McGeechan said: "Securing the services of our younger players is massively important for the long-term future of the club.
"We are working hard to develop young talent, both individually and collectively through the Wasps Academy, and it is fantastic that players like Dominic want to commit to the future of the club and continue the legacy of players like Lawrence Dallaglio.
"It is my aim to keep challenging our young stars by giving them the opportunities to come through and perform on the senior stage.
"Dominic is one of those players who has stepped up to the challenge and taken his opportunity with both hands."
Waldouck added: "I'm very excited about having agreed this contract. The last few months have been a fantastic experience for me, and I've thoroughly enjoyed the chance to play on some of rugby's biggest stages in the Guinness Premiership and Heineken Cup, and with some of the great players that we have here at Wasps.
"I'm really looking forward to the next couple of years. There's a good bunch of young players here and we are all eager to learn, to do well and to continue the success that Wasps have enjoyed over the past few years."