The Making Good Progress pilot, under which teachers will have two chances a year to put key stage 2 and 3 pupils in for assessment, so that pupils take the test when they are ready for it, was due to run until 2009. It will now go on until 2011.
The first of the new tests will begin next month in 484 schools across 10 local authorities.
The pilot is operating at an estimated cost of pound;20 million in its first year. In 2009-10, it has been allocated pound;138 million, which will also cover one-to-one tuition for pupils falling behind in English and maths. The following year, funding has been set at pound;315 million.
Ministers say that by 2011 the scheme will enable an extra 300,000 pupils currently under-attaining in English and maths to benefit from one-to-one tuition.
The Government is going ahead with the trials despite criticism.
Members of the influential Assessment Reform Group said the trial presented a host of technical problems, as well as raising the possibility of more teaching to the test.
Paul Black, emeritus professor of science education at King's College London and a member of the group, said: "Where's the evaluation of Making Good Progress?"
The National Foundation for Educational Research has also raised questions about the tests' design in evidence submitted to a Parliamentary inquiry into testing.
The Government has said that if the trial proves successful, it could replace national tests. But it is unclear whether the decision to extend the trial means there are plans to make it available nationwide.
A Department for Children, Families and Schools spokesman confirmed the testing pilot was being extended for a further two years. The extra funding, he said, would support the continuation of all aspects of the trial.