The new contract starts on 1 September 2012 and will run until 2017, with an option for a two-year extension.
Under the terms of the contract, FM Conway will continue to provide the council with a range of services including highway maintenance, carriageway surfacing, lining, civil engineering, traffic management and drainage works.
FM Conway and Merton Council have worked in partnership for more than 30 years.
FM Conway contracts manager Gus Smith said: “Merton means everything to FM Conway. It’s our flagship borough. At any one time, we have 60 people working in the borough. We’ve grown up together and developed together, and look forward to a successful future where we can explore exciting innovations together.”