The England international is close to finalising improved terms following fruitful talks over the last fortnight.

It is understodd that Walcott will put pen to paper on a deal that runs until 2017.

The 23-year-old's salary will climb to around 110,000-euros-a-week under the new agreement, which will be bolstered by top-up bonuses and a multi-million pound signing-on fee.

Walcott has indicated his desire to stay at Emirates Stadium after being offered an improved package by Arsenal. He has also been encouraged that Arsene Wenger has lived up to his promise of giving him opportunities to play in his favourite centre-forward role.

Walcott has started Arsenal's last five matches up front, scoring four goals, including a hat-trick against Newcastle United.

Despite being regularly overlooked by Wenger in the first three months of the season, he leads the club's scoring charts with 14 goals.

Both parties are confident the new deal will be signed by the end of the week, which will then allow Wenger to concentrate on reinforcing Arsenal's squad.

The manager has set his sights on acquiring a senior striker from Spain, with David Villa and Adrian Lopez his top two targets.

Securing Walcott's future will be a huge boost to Arsenal after tying fellow Brits Jack Wilshere, Alex Oxlade-Chamberlain, Kieran Gibbs, Aaron Ramsey and Carl Jenkinson to new five-year deals shortly before Christmas.

Walcott, whose contract expires in the summer, is free to sign a pre-contract with a foreign club this month.

Chelsea, Manchester United and Liverpool are among the leading clubs who had been keen to take advantage of his potential availability.