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Compatriot Stephen Hunt, who hit the headlines in October for the challenge that left Chelsea goalkeeper Petr Cech with a fractured skull, has also signed a new deal.
Hunt, whose previous contract was due to expire in the summer, is now contracted until the summer of 2009.
Like the Royals themselves, who thrashed West Ham 6-0 on New Year's Day, Doyle has been one of the surprise packages of the season.
The 23-year-old is the Premiership's third most prolific scorer so far and cost just £78,000 from Cork City two summers ago.
Hammond said: 'Kevin's contract extension is very significant and of major importance to our plans moving forward.
'He has quickly become an outstanding Premiership striker, and the great thing about Kevin is that despite all his success and his meteoric rise in the past 18 months, he's still the same level-headed young man who joined us from Cork.'
Hunt, 25, has been in and out of the side this season and received death threats through the post in the wake of the Cech incident, which Chelsea manager Jose Mourinho branded reckless.
But Hammond insisted there was more to the former Brentford man than that unfortunate incident in the first minute of his first top-flight start.
He said: 'Stephen as been terrific for us since joining and I'm delighted that he's signed for two more years. He has great energy levels, bags of enthusiasm and is a real breath of fresh air around the training ground every day.'
Chairman John Madejski added: 'This is extremely good news and I am delighted that Kevin and Stephen have committed themselves to Reading.'
Doyle's goals had led to him being valued at £8million and linked with rival Premiership clubs.
Manager Steve Coppell insisted yesterday that Doyle was going nowhere even though the transfer window was open and that also applied to each of the other players. And Doyle certainly appeared to be happy with that.
He said: 'Once we got to talking it was done pretty quickly. Thankfully Nick Hammond and the chairman (John Madejski) have shown faith in me for the next three and a half years.
'I don't think I could ever have planned the last couple of years.
'It has been a dream. I wouldn't have ever believed it could happen but I'll look to improve, and if I keep working hard then anything is possible.'