A longer ethernet cable would be much better than a plug in extension. These are available for a few pounds, This would replace the yellow cable supplied by Sky and the telephone extension. If your existing extension is done in Cat5 cable, as opposed to twin flat, there will be a little degradation, but not too much. If it is Cat5, check if the ring wire on terminal 3 is connected. If it is, pull it out and also disconnect it at the Master socket. This wire is only required for old type phones to make them ring.

If you are lucky enough to have Cat5 cabling you could consider fitting an XTF Socket This would replace your existing slave socket and provide ADSL and voice connections.