Raymond Domenech will stay on as coach after leading France to the World Cup final, the French Football Federation (FFF) said on Tuesday.
Domenech, who took over from Jacques Santini after Euro 2004, was offered an extension to his two-year contract and he accepted it, the FFF said on their website.
"Taking into account the excellent performance of France during the World Cup, the federal committee unanimously offered Raymond Domenech the chance to carry on his mission as national coach," a statement said.
The contract details of the extension will be discussed between federation chairman Jean-Pierre Escalettes and Domenech before the next meeting of the FFF's board.
France lost the World Cup final on penalties to Italy. They play a friendly against Bosnia-Herzegovina in Sarajevo on August 16.
They will start their qualifying campaign for the 2008 European championship with a game in Georgia on September 2 before they host the Italians at the Stade de France four days later.
Domenech, 54, wore the colours of Olympique Lyon, Strasbourg, Paris St Germain, Bordeaux and Mulhouse as a player between 1970 and 1988.
He helped Strasbourg to the league title in 1979 and Bordeaux in 1984, and won the French Cup with Lyon in 1973.
Considered a tough defender, he earned eight caps for France.
Domenech began coaching the France under-21 squad in 1993 and led the team to the final of the 2002 European championship in Switzerland.
He took over from Santini after France's failure at the 2004 European championship in Portugal and helped the 1998 world champions finish top of their group and qualify directly for the 2006 World Cup.
