Manager Brian Laws said: "Matthew has done tremendously well this year(but) in terms of pay he has always been on the low end and we need to reward players of his calibre."
Iron legend Tony Daws also praised Sparrow's ability, suggesting that it may have been in repsonse to an approach from another club.
He said: "I think it is good for the club to get Matthew tied to the club because he is going to be a star."
The club have also announced that their sponsorship deal with H & L garages will into a fourth year, and that £20K will be invested in a pitch irrigation system over the summer.