Town have confirmed that keeper Bartosz Bialkowski has signed his new deal, a three-year contract with an option for a further season.
The Blues rebuffed offers from Birmingham - an initial £2.75 million offer before a later bid of £3 million - to keep hold of Bialkowski, whose current terms were up at the end of the coming season.
"We did receive bids for Bart but they were rejected very quickly,” owner Marcus Evans confirmed to the club site.
"It was always my intention to try and keep him at this football club. Bart made it clear he wanted to stay as well but it was important to reach an agreement that was right for all parties.
"I’m delighted - and I’m sure the supporters are as well - that we have been able to do that.”
We understand weekend reports in the national press claiming the deal is worth £20,000 a week are a significant exaggeration, although the 31-year-old has received a substantial pay rise and will now be one of the club’s top earners.
The move to keep the Polish international, who returned to the Blues today following his post-World Cup break, will be hugely popular with fans who have voted Bialkowski their Player of the Year for the last three seasons.
The former Notts County and Southampton man putting pen to paper ends six months of uncertainty regarding his future.
In January, following interest from Crystal Palace, former manager Mick McCarthy prematurely announced that a new contract had been agreed.
However, Bialkowski later confirmed that there were still aspects of those terms to be finalised and talks were continuing, although he had every intention of remaining with the Blues.
Town expected interest in the summer and the bids from Birmingham duly arrived, however, discussions regarding the new deal - a year longer than the January terms - were already under way with only minor aspects needing to be concluded upon his return to the club today.
Bialkowski will be in the squad which travels to East Grinstead Town's East Court tomorrow to face League Two Crawley Town, but Danish international left-back Jonas Knudsen, who was also at the World Cup, has been given a further week away.
Town could announce another deal later today with Peterborough winger Gwion Edwards close to completing a £700,000 move.