Mr McCarten was chief of staff for former leader David Cunliffe and was kept on in a temporary basis after Mr Little won the leadership a month ago.
Mr McCarten's appointment in February stunned the Labour caucus because as a founder of the break-away Alliance, he had spent years opposing Labour.
But he has earned the trust of MPs and staff with his strategic skills and people management skills.
Mr Little has been reviewing the leaders' office. Yesterday he confirmed Mr McCarten's appointment and all other staff will be kept on.
Mr McCarten helped to found the militant Unite Union for low paid workers and Mr Little is a former national secretary of the Engineers' Union.
Mr MCarten was diagnosed with cancer in 2010 and when it spread in 2011 it was declared terminal by his doctors but he has since made a recovery.
By Audrey Young of the New Zealand Herald
