"We're delighted Kimi is staying with us for 2013," the British-based team said on their official Twitter feed after posting a link to a film clip on YouTube which hinted at the news.
Raikkonen, who won the 2007 title with Ferrari, made his Formula One comeback this season after ending a switch to the world rally championship.
The Finn has been the most consistent driver on the grid, with 14 successive scoring finishes and every racing lap completed. He has been on the podium six times in 2012.
The 33-year-old is third in the championship, 67 points off the lead, with three races to go despite not having won yet this season.
"I think my return to Formula 1 has gone pretty well and the team has done a very good job all year so far," said Raikkonen.
"To be honest, I didn't expect to be fighting for the drivers' championship this season when you look at where the team was in 2011, so it has been great to be on the podium so many times and to score points on a regular basis.
"I feel very comfortable with Lotus and we share the same philosophy of racing. Continuing with the team was an obvious choice for me and I'm looking forward to making another step forward together next year."
Team principal Eric Boullier said after Sunday's Indian Grand Prix that neither Raikkonen nor French team-mate Romain Grosjean were likely to win any of the season's final three races.
"Realistically I would be kidding people if I said we would win a race this year," he said.
"Yes I can be frustrated at not getting this missing, or elusive, win but we had a good start to the season with a new package and two new drivers. If you put us in the same position next year then it will be a different story."
Raikkonen was seventh in India, Grosjean ninth. Boullier said an announcement on the full driver line-up could be expected soon.
Grosjean, despite several first corner crashes of the kind that got him suspended for the Italian Grand Prix in September, is almost certain to be kept on as well.