"It is a massive boost for me because I had virtually written Wracky off," Merson told the Express and Star.
"I didn't think we would be able to keep him once his contract ran out but we've managed to come to an agreement with him, and it's brilliant news that he's staying.
"He's going to sign a three-year deal and that will include a testimonial in the final year, so it's worked out well for Wracky and for the club.
"It's great for me because a fit Darren Wrack can be a big part of my plans for next season. He was an important part of the way we played and the formation we used at the end of last season and was perfect for that system.
"A fully firing Darren Wrack can be a big player for us."