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.
Former Leicester defender Matthew Upson, who also played for Arsenal, said some might view Vardy's decision as a "strange" one.
"Having played for Arsenal, when that club comes calling, it's a big decision to turn it down because it is such a fabulous club," Upson told BBC Radio 5 live's Sports Panel.
However, the ex-England centre-half said that Arsenal's style of play might not have suited his former team-mate.
"When you look at how both teams play, there is such a contrast in style," said Upson. "Arsenal have a very methodical build-up, they like to play through the middle, on the floor, break lines with passes and are very clever and intricate."
Leicester, added Upson, played in a way that enabled Vardy to shine and become the star he is now.
"He's played some fabulous football in a team that really does cater to his strengths," said Upson. "So I can really understand the decision he made."
Upson added that Leicester had "laid a marker down" by holding on to Vardy and said it might convince other key players, like winger Riyad Mahrez and midfielder N'Golo Kante, to stay, too..
The news Vardy had decided to stay also 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.
Vardy 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.