The 23-year-old Wales striker joined the Terriers on a month's loan recently.
But boss Smon Grayson has been so impressed with the striker he wants him for the rest of the year.
Reading agreed to the extension, though Church remains locked in a contract wrangle with the club.
He has been offered a new deal but fears his first-team opportunities are limited at Madejski Stadium.
As as result, Church could now leave Reading for free when his current contract runs out in June.
He told the media recently: "I can't focus too much on my contract situation and what's going to happen when I go back to Reading. I've got to focus on what I can do on the pitch."
Church has made two appearances on loan for the Championship side, netting his first goal against Bolton last weekend.
It was his first goal in eight months and he admitted: "It had been a long time coming. In the context of the game it didn't mean much but personally it was a relief, a weight of my shoulders and a great confidence boost.
"It was good to get a lot of my frustration out and it's something I can build on."
Church has scored 24 goals in 121 appearances for Reading after rising through the youth system. But his only appearance this season came as a substitute in the Capital One Cup.
And he stressed: "Some people might be happy being part of squads - and at times you are going to have to do that. But I've done that for the last three years and it is time for me to play football now.
"As a striker, scoring goals is the best feeling ever and when you don't get the chance to do that you feel like you are training for the sake of training."