"Real Madrid and Carlo Ancelotti have reached agreement on the extension of his contract till June 30, 2026," Real said in a statement.

It had been reported in July this year that 64-year-old Ancelotti would become the first foreigner to coach Brazil in almost 60 years once he saw out his present Real contract next year.

The Brazil Football Confederation had named Fernando Diniz as the temporary manager before they anticipated Ancelotti taking control for the 2024 Copa America.

Ednaldo Rodriguez, the then president of the CBF, held months of negotiations with Ancelotti, who had previously stated the Real job would be his last in football.

However, it appeared one of the most glamorous and challenging jobs in football had brought a change of mind.

"We went after him not only due to his record, but also because he is a decent person," Rodrigues told beIN Sports earlier this year.

"Those who have worked with him say that he is open, cultured, and he appreciates Brazilian football."

However, under Diniz Brazil's woes on the pitch have continued and the team currently occupy the sixth and final regional qualifying spot for the 2026 World Cup.

The CBF did not wish to comment on the news about Ancelotti when contacted by AFP on Friday.

Ancelotti for his part never verbally confirmed that he had agreed to become Brazil coach.

"I am still here," he told the press on October 21.

"There are a lot of rumours, but I think everything will be clearer soon.

"Obviously as I have repeatedly said, I am very happy at Real Madrid.

"I am an egotist, of course," he added drily.

Compared to Brazil, Real's results this season have been largely positive -- they top La Liga and eased into the Champions League knockout rounds with six wins from six matches.

Ancelotti is regarded as one of the greatest coaches of all time.

He has won the Champions League four times -- twice with AC Milan and twice with Real Madrid.

He has won domestic league titles with Real and Milan, in England with Chelsea, in Germany with Bayern Munich and in France with Paris Saint-Germain.