Doncaster-born Butler, 31, has enjoyed a flourishing loan spell at his hometown club after joining on loan from the Blades, having only signed for the Bramall Lane outfit last summer from Walsall.
The experienced centre-half soon fell out of favour at the Blades and featured just once for the club, finding the net in a 2-1 Capital One Cup victory over Mansfield Town on August 13.
Butler, whose former clubs also include Huddersfield Town and Scunthorpe United, soon re-joined former club Walsall on loan, with the ex-Saddlers captain featuring seven times before signing for Rovers on loan in late October.
In the absence of defensive enforcer Rob Jones, Butler has taken on a leadership role in the heart of the back four and has sampled defeat just twice in 13 appearances for the club.
Butler’s contract keeps him at Rovers until the summer of 2017.
Speaking earlier this week, he said: “I’m really enjoying my time here and the manager’s brilliant with me, as are the players and I’ve loved every minute and I love playing for my home team.
“It’s a little surreal because I thought it would never happen,”