Manchester City boss Manuel Pellegrini has signed a new contract which keeps him at the Etihad until June 2017.

Pellegrini, 61, was heading into the last year of his original three-year agreement, with speculation rife that City were planning to replace him - potentially with Bayern Munich coach Pep Guardiola - next summer.

But in a show of support for the man who brought the Premier League title to the Etihad Stadium in 2014, City have extended his contract for a further 12 months.

Similar contract extensions have been agreed with his backroom staff of Ruben Cousillas, Xabier Mancisidor and Jose Cabello.

Pellegrini told the club's website: "I am proud to manage Manchester City FC and am therefore very pleased to have agreed this contract.

"I have a very good quality group of players and a great team of people to work with on and off the field and at all levels of the club.

"I am focused on the coming season and confident that my team and I will respond to the constant support shown to us by everyone including of course our fantastic fans."

The club's chief executive officer, Ferran Soriano, added: "We are delighted to reach this agreement with Manuel Pellegrini who has already contributed so much to the development of Manchester City in his first two years with us and we look forward to further progress in the seasons ahead.

"This agreement allows Manuel to focus on the challenge of guiding a team capable of both fighting for domestic titles and competing for European honors."