Lampard had been expected to leave Stamford Bridge in the summer when his current deal expires, but Chelsea owner Roman Abramovich is believed to have reconsidered amid fan protests.
The evergreen 34-year-old underlined his longevity by scoring the winner in England’s 2-1 friendly win over Brazil on Wednesday, and is only five goals short of equalling Chelsea’s all-time scoring record.
Chelsea’s apparent U-turn comes after England manager Roy Hodgson warned Lampard that he would be putting his international future in jeopardy if he joined a club outside of Europe.
“If he goes further afield and follows David [Beckham to LA Galaxy], it complicates matters but it doesn’t mean your career is over with England,” Hodgson said.
“But the further afield you go, the more problematic it gets for the media and the England manager to follow you.”