A statement on Liverpool website said that Mascherano's contract starts from june 2008 and runs until 2012.

The 23-year old international player joined the Reds, on loan, in January 2007 coming from West Ham United. Since then he featured in 40 games including a Champions League final in May 2007.

"I am very, very happy and now I can concentrate just on playing football. I said all along that I wanted to stay at Liverpool and now that I have signed I can say this is the best and the biggest moment in my career so far," Mascherano was quoted saying on the club's website.

Reports in the Italian media have linked the Argentina midfielder with Juventus and AC Milan claiming that the Old Lady reached an agreement with West Ham.