The third-year scholar, 18, has been rewarded with the number 27 shirt after making the giant leap from youth team to first team last season and impressing new manager Steve Cotterill in pre-season.
Manchester-born Townsend, who spent part of his youth in Australia, initially joined the Clarets two years ago after playing a couple of trial matches for the youth team at the end of the 2001/02 season.
Townsend made an immediate impact and last season captained the youth team in the Lancashire FA Youth Cup Final.
He made the first team bench under previous manager Stan Ternent for the first time at home to West Ham United in March, and made his full Clarets debut as a late substitute in the 4-0 defeat at Coventry City later that month.
Townsend has since been involved in the early pre-season games under Cotterill, playing a part against both Accrington Stanley and Dundee United.
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