Gerrard ready to stay put after Liverpool night of glory

Steven Gerrard yesterday gave the strongest signal yet that he will end more than a year's worth of transfer speculation linking him to Chelsea and sign a new deal with Liverpool, less than 24 hours after his club won a place in the European Cup final.

The Liverpool captain said that after the final in Istanbul on 25 May he expected to enter serious negotiations with the chief executive Rick Parry and manager Rafael Benitez over a deal that would extend the current two years he has left on his contract.

After narrowly deciding last summer against a move to Chelsea, who last night announced the anticipated contract extension for manager Jose Mourinho that will keep him at the club until 2010, Gerrard initially wavered over his future. However, even before Tuesday's Champions' League semi-final win, the 24-year-old seemed to be leaning towards staying at Anfield.

Gerrard said: "I didn't want any distractions before the game, and it will be the same before the final, but after the Champions' League final I can say I will be sitting down with Rick Parry and the gaffer and discussing the future. That has been the situation for a while so, from that point of view, nothing has changed.

"But obviously a result like this helps everyone at the club and we will have a lot of positive things to talk about. I have said all along all I wanted was to see the club going in the right direction and this shows we are. Now we want to go on and win the competition."

Liverpool will almost certainly have to make Gerrard the highest-paid player in their history with a salary increase that could reach about £90,000 a week, which would be a serious undertaking with their future in the Champions' League next season still far from secure. Chelsea's pursuit of Gerrard has been one of the less glorious episodes of the Roman Abramovich era, with the player only deciding against a move to Stamford Bridge last summer after he was talked out of leaving by friends.

While sources at Chelsea in the early part of the season have indicated that they were confident of landing Gerrard this summer, that certainty has decreased in recent weeks and been accompanied by reports alleging that the new Premiership champions no longer want him.

The dispute over which club gets the fourth Champions' League place next season will be decided by the end of the week after the Football Association's Professional Game Board gives its recommendations today. Already it looks likely the FA will find in favour of the fourth-placed team - currently Everton - earning the spot, even if Liverpool win the Champions' League.

With Uefa steadfast in its refusal to make a fifth place available, and the Premier League privately in favour of the fourth-placed team reaching the Champions' League, the FA has been left with an unenviable decision to make. It is the first contentious decision that the new chief executive Brian Barwick has been called upon to make and it has not been made any easier by his well-publicised allegiance to Liverpool.

Mourinho has two years left on his present contract and his new, extended five-year deal will run from the start of next season up until 2010. He will receive a £1m a year pay rise taking his basic salary to £5.2m a year and confirming him as the highest-paid employee at Chelsea and enhancing his status as the best-remunerated football manager in the world. At the same time a multimillion pound bonus package will remain in place which equates to a year's salary if he wins the Champions' League, Premiership, FA Cup and Carling Cup. If he retains the League he will receive a £1m bonus, if he wins the European Cup he gets more than £2m. A clean sweep of trophies means he could receive £10.4m in one season.

Mourinho agreed terms at a meeting at Stamford Bridge yesterday, at which transfer targets were also discussed, and the deal follows the crisis provoked by the manager's well-reported unhappiness at a perceived lack of support from the club over his two-match Uefa ban and various other issues.

Chelsea, who will receive the Premiership trophy this Saturday, maintain that the contract, which was first discussed after the League Cup victory in February, was always scheduled to be finalised this week, although Mourinho had, initially, been told he would have to wait until the summer.

Last night Mourinho, whose power at the club is now immense following the crisis, said: "I am delighted to be signing this new contract.

"My heart is with Chelsea and also with the fantastic group of players I have. The vision of the owner and the board for the future of Chelsea is also one I want to be part of.

"I am totally behind this project and their support in achieving it means that Chelsea is the place where I will be happiest in my work. I cannot imagine another club or any situation where I would be happier," Mourinho emphasised.

Chelsea's chief executive Peter Kenyon added: "Both the club and Jose share a long-term vision for the future, that was clear from the moment we first met. We talked then about a 10-year plan for Chelsea and Jose wanted to be an integral part of building that."