Last year Cooper had agreed a new two-year deal with the Reds but only signed for one following lucrative offers from rugby league.
But Cooper has enjoyed an outstanding season to date with the pace-setting Reds and is seen as one of the best fly-halves in the world.
The deal will keep Cooper in the Wallabies set-up until 2012 but they will be hoping to extend that further with the Lions due to tour 'down under' in 2013.
Cooper's re-signing follows that of Reds Test players James Horwill and Ben Daley, as well as rising winger Luke Morahan.
But Queensland have a major fight on their hands to keep strike weapon Digby Ioane from accepting a massive offer from Japanese club Kubota.