The Germany midfielder moved to Stamford Bridge from Bayern Munich in 2006 and has won two FA Cups and a Carling Cup in his time in the capital.

Ballack, 32, told the club's official website: "I am very happy to be staying at Chelsea for one more year as it was always my intention to play in London at least until the World Cup in 2010.

"We had a fantastic end to the season, winning the FA Cup, and we are all looking forward to taking this success into the new season under Carlo Ancelotti, our new manager."

very happy

A Chelsea statement added: "Michael has been a key member of our team for three years so we are naturally very happy that we have agreed the extension."

Ancelotti was named as Chelsea manager on Monday and Ballack is looking forward to working with the former AC Milan tactician.

"I don't know him very well," added Ballack. "But he has had great success with AC Milan. I think that's what we need at Chelsea, we need consistency. You always need time to adapt to a new manager."

www.chelseafc.com