The firm, which operates services across the West Midlands, said it would now operate up to March 2016.
The Department for Transport (DfT) said the process of awarding a contract beyond then had not begun.
In March London Midland announced it would shed 150 jobs, while in November it said driver shortages had led to cancelled or delayed services.
Figures showed about 20% of its 1,311 daily services were delayed or cancelled throughout October.
The firm has said the 150 redundancies would focus on head office and support staff and would not affect services.
A DfT spokesman said during the extra six months it would be "working closely with the company to ensure they continue to improve the service they provide to passengers".
The process had not yet started of awarding a so-called management contract to run from March 2016 to June 2017, the department said.
It added a new franchise was planned to run from June 2017, which also has not yet been awarded.

Ganesan Nimalaruban died and several other inmates, all Tamil Tiger suspects, were reportedly injured after a failed prison mutiny in the north.
The authorities deny mistreating him, saying he died of a heart attack.
They say that the prisoners were working with Tamil separatists abroad.
Human rights lawyers working with the parents of Mr Nimalaruban have lodged a petition over the death at the Supreme Court.
They want to overturn a court ruling that he must be cremated near the capital, Colombo.
His grieving mother and father say they would prefer to give him the last rites in their home district, Vavuniya in northern Sri Lanka.
They reject assertions by the authorities that such a funeral would be a security risk.
It was in the Vavuniya prison that 32 inmates who are Tamil Tiger suspects took three prison guards hostage in late June, holding them for 19 hours in a protest against prisoner transfers.
The siege was successfully broken and all the prisoners relocated.
But rights campaigners and Tamil MPs say the prison authorities and police worked with other inmates to exact a terrible revenge, attacking them with stones and weapons, physically throwing them or breaking their legs.
Nimalaruban's parents said his body was covered in blood.
The authorities deny all the accusations.
At least one other prisoner is reported to be in a coma and in hospital.

Cameron Marshall Ward was struck by a blue Vauxhall Vectra on Court Lane in Erdington shortly after 21:10 BST on Easter Monday, 1 April, last year.
Wayne Payne was found guilty of causing death by dangerous driving.
The 31-year-old, of Somerset Road, Erdington, was sentenced at Birmingham Crown Court earlier.

It was drawn up following the death of 16-year-old Bailey Gwynne, who was stabbed during a fight with a fellow pupil at Cults Academy.
Staff will be provided with clarity on the recording of incidents in schools, pupil searches and when and how to confiscate weapons, including knives.
The schoolboy's killer is serving nine years for culpable homicide.
An independent review into the death of Bailey in October last year found his death was "potentially avoidable" if teachers had known his attacker carried a knife.
The review, conducted by child welfare professional Andrew Lowe, made 21 recommendations.
Other actions approved by the council include providing professional learning opportunities to teachers in order that they can deliver anti-weapon and knife crime lessons.
Gayle Gorman, director of education and children's services, said: "The report before committee outlined and demonstrated Aberdeen City Council and our partners clear commitment to implement the recommendations of the review - and indeed to go further to ensure that our children, young people, families, communities and staff are as informed as they can be regarding the tragic and devastating consequences of carrying weapons.
"I know that no strategy, or indeed case review, will alter the fact that Bailey is no longer with us and that his loss is keenly felt by all who knew and loved him.
"As always my thoughts are with Bailey's family."
London Midland has had its franchise extended by six months, the train company has announced.
[NEXT_CONCEPT]
The parents of a prisoner who died in obscure circumstances in Sri Lanka are locked in a battle with officials who say his body cannot be taken to his home town for the last rites.
[NEXT_CONCEPT]
A driver who killed a five-year-old boy when he hit him with his car in Birmingham has been jailed for five years.
[NEXT_CONCEPT]
A strategy aimed at preventing knives and weapons getting into Aberdeen schools has been approved.