The Swiss, whose previous deal was due to expire next year, had reportedly attracted the interest of Ligue 1 giants Marseille, but Favre has now put to bed any speculation about his future by signing an extension with Gladbach.

"I had been in talks with the board of directors for a while, and I'm pleased that we've now reached an agreement. I'm looking forward to the challenges ahead," Favre said.

The 54-year-old joined the club in February 2011, and steered the team away from the relegation zone in his first season, before guiding them fourth spot in the Bundesliga table - and a chance at Champions League qualification - last term.

Favre previous clubs include Servette, Zurich and Hertha Berlin.

His new deal at Borussia-Park runs until the end of the 2014/15 campaign.