The 28-year-old joined from Liverpool in 2018 and helped City win the FA Cup and Continental Cup in her first year.
“I’ve had a really good two years, especially last season,” Bonner told the club’s website.
“I played some of my best football with some incredible players around me, so I can’t wait to continue that journey.”
City finished second behind Chelsea in this season’s WSL after the campaign was ended early amid the coronavirus pandemic.
“With the appointment of Gareth Taylor as our head coach too, it’s a really exciting time for the club and we’re ready for the challenges that lie ahead,” she added.