It was thought that the frozen food retailer would axe Katona after allegations that she had taken drugs, which she denies.
In January, it was reported that Iceland was dispensing with, or at least scaling down, its advertising connection with Katona.
It was said that the constant tabloid reporting of the "car-crash" elements of her life, including drugs, debts, and breakdowns, had become detrimental to Iceland's brand values.
Critics argued that Katona had become bigger than the brand, with media coverage overshadowing rather than enhancing brand values.
However, it was also pointed out by some that Katona guaranteed front-page headlines. Iceland refused to comment on the speculation.
Iceland's ads, which are created by Tom Reddy Advertising, have recently used other stars including Jason Donovan and Coleen Nolan, adding fuel to the speculation that Katona would be dropped once her contract came up for renewal in March.
However, in a statement sent to Brand Republic, Iceland said: "We can confirm that Kerry Katona's contract is in the process of being renewed for another 12 months."