Mark Palios, Chief Executive of The FA, said: "This is excellent news for the England team, the millions of England supporters, and also for everyone connected with The FA.

"The FA identified Sven as the right coach to lead us, not only to the Euro 2004 tournament but also to the 2006 World Cup and beyond.

"Sven's record in charge of the England team is outstanding and he has built up a magnificent relationship with the England squad.

"Now we can all focus on getting behind Sven and the team as they prepare for the 2004 championships."

Sven-Goran Eriksson added: "I have already said that being the coach of the England team is a great honour and I am glad that we have been able to come to an agreement for me to extend my involvement with the national team.

"England has a magnificent footballing tradition and my focus now must be on trying to bring home the Euro 2004 trophy from Lisbon this summer. Then we can turn our attention on, first, qualifying for the World cup, and then winning it in Germany in 2006."

Sven's assistant Tord Grip has also been offered a contract extension to take him through to 2008.