"We've struck an agreement. Willy will definitely stay with us for another four years. The player will definitely make his decision public this week," Bayern football director Uli Hoeness was quoted as saying by Bayern's website.

Sagnol was linked with a move to Italian powerhouse Juventus after his contract runs out in June 2006 but he made a last-minute retraction to agree new deal with the Bavarians.

Joining Bayern from French side Monaco in 2000, Sagnol won a host of medals after clinching three Bundesliga championships, two DFB German Cups, the Champions League and the World Club Cup.

The 28-year-old Frenchman made 137 Bundesliga appearances and 46 Champions League fixtures for Bayern with a tally of five goals.

Sagnol's deal comes within Bayern policy to secure long-term contracts with their stars including veteran goalkeeper Oliver Kahn, Sebastian Deisler, Lucio, Martin Demichelis and Owen Hargreaves.

Bayern are still in talks with their playmaker and Germany skipper Michael Ballack to keep him in ranks next season as reports linked him with Real Madrid and Manchester United.