The Germany skipper's contract at Stamford Bridge was set to expire this summer, and the Chelsea board made sure he won't leave the club by offering him a new deal.

"I am very happy to be staying at Chelsea for one more year," Ballack told Chelsea's official website.

"It was always my intention to play in London at least until the World Cup in 2010."

Ballack moved to Chelsea on a free transfer after his contract with Bayern Munich expired in 2006.

The former Bayer Leverkusen man has since then became an important part of the club's setup, helping Chelsea win two FA Cups in three seasons including this year's trophy.

"We had a fantastic end to the season, and we are all looking forward to taking this success into the new season under Carlo Ancelotti," the 32-year-old concluded.

After spending the second half of the past season under the temporary management of Guus Hiddink, Ballack will play under Ancelotti starting next season.