The Finnish international's current contract ends in the summer although there is a two-year option that can be taken up if both parties reach agreement.

Forssell has looked revitalised in partnership with January signing James McFadden and scored a hat-trick in Birmingham's 4-1 win over Tottenham Hotspur in their last home match.

Now the partnership is set to be renewed against Newcastle United at St Andrews on Monday after McFadden was only used as a substitute at Portsmouth in midweek after his partner gave birth.

Larsson said: "When Mikael is fit, like he is now, and getting a few games under his belt, everyone knows what he can do.

"He got a hat-trick in the last home game and was fantastic and Mikael and James McFadden have looked really good together lately as a partnership.

"It is important to keep a proven goalscorer at the club, definitely. Mikael has got more to his game than just scoring goals and hopefully it is something Mikael and the club can sort out."

Larsson is also confident the Blues can bounce back from their 4-2 defeat at Fratton Park, as victory on Monday would take them above Newcastle.

Larsson added: "It's so close this year at the bottom end of the table and there are probably six or seven teams fighting to stay up. It's unbelievably tight.

"If we can get a good result at home to Newcastle then we will be flying again. We're confident we can do that, especially as we are at St Andrew's where we've been good of late."