MADRID (AFP) - Real Madrid midfielder Xabi Alonso has ended speculation over his future by signing a new two-year contract, he confirmed on Wednesday, Jan 8, 2014.

"This will continue to be my home for two more years. I am very happy to tell you. Come on Madrid!" he posted on his official Twitter account.

The 32-year-old had been free to talk to other clubs since Jan 1 as his previous deal was set to come to an end in June.

However, despite interest from a number of leading European clubs, including Manchester City, Chelsea and Paris Saint-Germain, Madrid have managed to tie down the Spain international.

Spanish media reported that the former Liverpool man will earn 6 million euros (S$7.6 million) net a season, a 2 million euro increase on his previous deal.

Alonso's start to the current campaign had been disrupted by a groin injury and breaking a bone in his foot in August.

However, since his return at the end of October, his importance to Carlo Ancelotti's side has been immense as Real have embarked on a 13-game unbeaten run.

After starting his career at Basque side Real Sociedad, Alonso was signed by compatriot Rafael Benitez for Liverpool in 2004 for 10.5 million pounds.

He became a fans' favourite during his five years in Merseyside and famously scored the equaliser as Liverpool came from 3-0 down at half-time to beat AC Milan on penalties in the 2005 Champions League final.

In 2009 he joined Madrid in a 30 million pound move as part of Real president Florentino Perez's promised spending spree upon being elected for a second term in charge.

He played 36 league games as Madrid won La Liga with a club record 100 points under Jose Mourinho in 2011-2012.

And Alonso has also played a key role in the Spanish national team's era of dominance as he played in every game when they won the World Cup for the first time in 2010 and a second consecutive European Championship in 2012.