He has qualified for the contract after playing in three Tests against India and the match against New Zealand, where he replaced Graeme Swann, who is set for an elbow operation.
Players who aren't centrally contracted by the ECB are able to earn an increment contract by playing a set number of international matches in a 12-month period.
Each Test match earns a player five points and a limited overs match two points and when they reach 20 points, they qualify for the contract.
"This award reflects the contribution Monty has made to the Test team during the winter and I would like to congratulate him on his achievements," national selector Geoff Miller said.
Panesar was left unbeaten on one as England were shot out for 167 in their first innings in Dunedin.
© Cricket World 2013
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