England striker and Arsenal target Jamie Vardy has agreed a new deal with Premier League champions Leicester.

The Foxes said the 29-year-old, whose goals helped the club claim a shock title success last season, will sign an extended four-year contract.

"Both parties hope this announcement will end recent speculation regarding Jamie's future," a club statement said.

Vardy was the subject of a reported £20m bid from Premier League rivals Arsenal before the start of Euro 2016.

That bid activated a release clause in his contract, with the Gunners offering him a deal reported to be worth £120,000 a week.

Leicester responded with an offer said to be worth £100,000.

Vardy, who joined the Foxes from non-league Fleetwood Town for £1m in 2012, had already signed a new three-year deal with the club in February.

He is currently on duty with England at Euro 2016 in France and scored in the 2-1 win over Wales in the group stage.

Roy Hodgson's side eventually finished second in Group B to make it through to the last 16, where they will face Iceland on Monday.

The news that Vardy had decided to stay with Leicester delighted Gary Lineker.

The former Foxes striker tweeted: "A show of loyalty from @vardy7 and a show of ambition from @LCFC is to be applauded."

But Vardy's decision means that former club Fleetwood miss out on a lucrative payday courtesy of a sell-on clause in his contract.

Leicester City players and officials erupt with joy as they celebrate with the coveted Barclays Premier League trophy. File Photo: Reuters