The England midfielder said he wanted to leave Old Trafford earlier this year and was high on the wanted list of Blues boss Steve Bruce during the January transfer window.
Butt declined a move to St. Andrews although Blues stated their intentions to try again for the midfielder again in the summer.
However, having now fought his way back into Sir Alex Ferguson's starting eleven, Butt has stated his intentions to remain at Old Trafford.
"I always said it would be difficult to leave this club and now I'm glad I didn't.
"It's the club I've grown up with and I definitely see my future here.
"I had become a bit disillusioned because you can only be patient for so long.
"But experience has taught me things can change very quickly in football and over the last three to four weeks I have played in quite a few games, albeit through others being injured or suspended.
"Now I am playing, I am really happy but I need to prove I am good enough to stay in the team and start improving my performance."