There was no word on Albon's future teammate, however. The second seat is currently filled by Canadian Nicholas Latifi (27), with speculation he is likely to be replaced.
Williams had flagged up on social media they were making an announcement, with Formula 1 followers in a high state of excitement after a couple of bombshell driver moves in the last two days.
Australian Oscar Piastri (21), the youngster who was announced by Renault-owned Alpine as a 2023 driver on Tuesday, and then publicly rejected the move, has also been linked with Williams.
"It’s really exciting to be staying with Williams Racing for 2023," Albon said in a statement. "I look forward to seeing what we can achieve as a team in the remainder of this season and next year."
Albon joined the Mercedes-powered team this year following a year out of Formula 1 after losing his seat at Red Bull.
The former champions are last in the standings after 13 races, with Albon scoring all three points so far. Latifi is the only driver on the grid who has yet to score.
"Alex is a tremendous driver and valued member of Williams Racing, so we’re thrilled to be able to confirm we will be working with him on a long-term basis," said Williams principal Jost Capito.
"Alex brings a great blend of skill and insightful learnings that will help bring the team greater success in the future.
"He’s a fierce competitor, has proved a popular and loyal team member and we are delighted that he will provide a stable base for us to continue to develop in this new F1 car era."
