The Hatters boss has agreed a new deal until 2027, with Town anticipating to have moved from Kenilworth Road into their new 17,500 all-seater stadium by then.
Fresh outline proposals were submitted without the stadium and unanimously passed by a Luton Council development management committee in October, with a detailed plan to follow in the first half of this year.
The club had hoped to play their first game at the stadium in 2024, as although that might be pushed back, one thing that Sweet remains certain of is who will be in the home dugout when Town finally do take to the field.
Speaking to the club's official website, he said: "On behalf of the board, who have been wholeheartedly and unanimously supportive of this decision, I would like to thank Nathan on his commitment to Luton Town and in dedicating his long-term future to the club.
“His energy, drive, passion, intellect and enthusiasm make him a very special character who we feel lucky to have at the helm and which makes him a genuine pleasure to work with.
“It’s rare for a club and manager to have such a progressive and harmonious bond.
"Sometimes you must recognise when that bond is positively unique for both parties and make sure it’s safeguarded.
“The club currently sits on the precipice of an ambitious elevation of fortunes.
"With Power Court progressing soundly, a great squad of talented and respectable lads capable of the next step, supported by a superb team of technical staff – all of whom help develop the unique culture that sets us apart.
“Nathan has been a key part of nurturing that and I’m more than delighted that he will continue that journey and walk our team out in a new stadium.”