The former Real Madrid boss has been in charge of Wales since November 2004, with his current deal running out early next season at the end of the World Cup qualifiers.

It has long been expected Toshack would stay on in control. The Football Association of Wales have been delighted with his five-year stay, which has seen the national squad transformed with an influx of youngsters, with the aid of under-21 boss Brian Flynn.

In fact, before Christmas, Toshack was told he could have a new contract if he wanted one and since then the FAW have waited for his decision.

Now Toshack, who will be 60 next month, has accepted a new two-year deal that will eventually stretch his stay in charge of the Welsh set-up to seven years.

That equals the time both Jimmy Murphy - who took Wales to the 1958 World Cup finals in Sweden - and Mike England were in control of their country's fortunes.

The longest-serving Wales manager was Dave Bowen, between 1964 and 1974, a record that is not likely to be broken.

Toshack, it is believed, has considered coaching and director of football roles in Spain, where he still spends much of his time.

But his decision to stay on with Wales has been reached after he reviewed the progress being made by his young generation.

They may not quite be experienced enough to qualify for the South Africa 2010 finals, but Toshack firmly believes this current crop of players can reach a major finals.

Toshack will now be in charge of Wales until the end of qualifying for the 2012 European Championships, due to be held in Poland and Ukraine.

An FAW spokesman said: "The Football Association of Wales is delighted to announce that John Toshack, national team coach, has accepted a two-year extension to his contract.

"Mr Toshack will continue his excellent work with the Wales senior international team until the end of the Euro 2012 campaign."

There have been several discussions over the new deal, and the FAW council have ratified the move.

Wales' last game was a 1-0 win in Copenhagen in November, and PA Sport then predicted Toshack would sign a new deal before their next match.

That has now proved correct, with Wales playing their next match against Poland in Portugal on February 11.

Toshack has been in charge of 40 Wales matches, winning 17 and drawing eight.

In that time he has withstood plenty of criticism for the way he rebuilt former boss Mark Hughes' squad.

He has ruthlessly ended Robbie Savage's international career while seeing experienced stars like Ryan Giggs, Paul Jones and John Hartson retire from international football.

There have also been a group of other players who have been jettisoned after falling out with Toshack, including Danny Collins, Ben Thatcher, John Oster and Paul Parry.

But Toshack sees a bright new future based around young stars like Aaron Ramsey, Wayne Hennessey, Chris Gunter, Gareth Bale, Joe Ledley, David Edwards, Ched Evans and Sam Vokes.

All have been promoted quickly from the under-21s and now form the basis of Toshack's squad.

A rich man already with homes in Swansea, Majorca and San Sebastian, Toshack does not have the need for constant employment.

And frequently he has said "someone else will have the benefits of what has happened with this new Wales squad".

Now, it seems, Toshack wants to be around to see the fruits of his rebuilding develop further and hopefully become the first Wales coach to qualify the team for a major tournament finals since 1958.