The 24-year-old Wales international joined Palace on loan from National Women's Soccer League club Seattle Reign in September, and has since made 11 appearances for the club in the Barclays Women's Super League.
Following the extension, her loan spell with Palace is now set to conclude on 30th June 2025.
A senior Wales international, Woodham has also made 33 appearances for her country, and helped The Dragons reach their first-ever major tournament with a goal and assist in their play-off win over the Republic of Ireland earlier this season.