The 25-year-old has played a pivotal role in Edinburgh's success this season with the team from the Scottish capital on course to surpass their previous best ever finish of fifth place in the Magners League.
As a result, Edinburgh-born Godman, who was educated at Merchiston Castle School, revealed he was overjoyed to be able to continue his development at his hometown team.
Godman said: "It has been a good season and I've really enjoyed every minute of it. There is a special team spirit at Edinburgh and that has helped the team achieve success.
"I think it is a really exciting place to be because we are planning to build on this season's results.
"Our aspirations are to make an even bigger impact in the Heineken Cup and the Magners League.
"It has been a good year for me. I think I've been improving and I'm looking to develop as an individual and take it on another step."
With David Blair recapturing his early season form and following the arrival of Chris Paterson, Godman acknowledges he faces serious competition in order to retain the number 10 shirt at Edinburgh next season.
But the former Newcastle playmaker welcomed the challenge and says that intense competition for places will enable Edinburgh to enjoy continued success.
He added: "The competition for places will keep me on my toes. If you are in any team worth its salt, then you will have competition for your place; it would be strange to not have someone breathing down your neck.
"There will be no change in my attitude at all and it will keep me working as hard as I currently am. It can only be good for Edinburgh as a squad that we have so much competition for places."
Godman praised the influence of head coach Andy Robinson, assistant coach Rob Moffat and also Gregor Townsend, who has been helping him develop his game management at stand-off.
He said: "I've obtained a great insight from all three of them. Obviously Andy has been a revelation since he has come in and everyone has been delighted with what he has brought to the team.
"Gregor has come in and also given me some useful advice; not just for me, but also for the whole of the back line. I think we are turning into one of the most dangerous back lines around and that is very pleasing."
Robinson highlighted Godman's contribution at stand-off and commended him on showing character in order to overcome a couple of setbacks over the past 12 months.
Robinson said: "The way we have been developing our running game is partly due to the great skills that Phil has.
"He had a couple of setbacks; not being involved in the World Cup last year and finding himself out of the Edinburgh team.
"He had to pick himself up and decide what he really wanted to do. He has challenged himself over the past three or four months and he has played really well."
Meanwhile, Edinburgh have announced the departures of Augusto Allori, Alistair Warnock and Andrew Maxwell with the trio leaving the club at the end of the season.
Argentina international prop Allori, 29, moves to Italian side Benetton Treviso after one year in the Scottish capital and stand-off Warnock heads south to join Doncaster Knights while Maxwell, 26, has decided to pursue business interests overseas.
Robinson thanked the trio for their efforts over the course of the season and wished them well as they parted company with Edinburgh.
Robinson said: "We would like to wish all three players, Augusto, Alistair and Andrew our very best wishes as they move away to pastures new.
"They have all been good professionals during their time at Edinburgh and have been popular members of the squad."
Ahead of the Scarlets match, Allan Jacobsen has been named amongst the replacements after suffering a two-month lay-off with a groin injury picked up while on RBS 6 Nations duty with Scotland.
In the back three, Scotland full-back Hugo Southwell returns to the starting line-up after missing the win at Ospreys because of family commitments.
As a result, Calum MacRae switches across to the right wing while replacement Craig Hamilton has returned from injury and Mark Robertson is also on the bench for the first time this season after recovering from a shoulder problem.
But Edinburgh have still got numerous injury worries with Ross Rennie (knee), Simon Cross (lower back), John Houston (head knock), Andrew Kelly (calf), Gavin Kerr (neck), Roland Reid (hamstring), Craig Smith (calf) and Simon Webster (hamstring) all ruled out for the match.
Edinburgh Rugby Club squad to play Llanelli Scarlets at Stradey Park
15 Hugo Southwell
14 Calum MacRae
13 Ben Cairns
12 Nick De Luca
11 Andrew Turnbull
10 Phil Godman
9 Mike Blair
1 Augusto Allori
2 Ross Ford
3 Geoff Cross
4 Matt Mustchin
5 Ben Gissing
6 Allister Hogg (captain)
7 Alan MacDonald
8 David Callam
Substitutes: Steve Lawrie, Allan Jacobsen, Craig Hamilton, Scott Newlands, Greig Laidlaw, David Blair, Mark Robertson.
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