Benitez won the Champions
League with the Reds in 2005

The 48-year-old put pen to paper after protracted negotiations which put a doubt over his tenure at the club.

But Benitez said: "My heart is with Liverpool, so I'm delighted to sign this new deal.

"I love the club, the fans and the city and with a club and supporters like this, I could never say no to staying."

Benitez has signed a five-year contract after a week in which he has led his team to two of his most impressive wins since taking over in 2004.

The Reds beat Real Madrid 4-0 in the second leg of their last-16 Champions League tie to earn a 5-0 on aggregate victory which put them into the quarter-finals of the competition.

They then went to Old Trafford and came back from a goal down to win 4-1 against arch-rivals Manchester United in the Premier League, reigniting hopes of a first league title for Liverpool since 1990.

Benitez added: "I always made clear I wanted to be here for a long time and when I complete my new contract it will mean I have spent over a decade in Liverpool.

"The club is greatly respected around the world due to its incredible history and tremendous heritage.

"It is my aim to uphold those values and help create a new chapter in our history.

"Throughout this process, I would like to thank the owners for their hard work in finalising the deal.

"All of us at the club want the same thing, which is to be successful by winning major trophies."

The rumours over Benitez's future reached a climax before the first leg of the tie against Real Madrid when some bookmakers stopped taking bets on him being at the club beyond the end of the week.

But the Spaniard insisted he was surprised by the speculation and that he was confident of staying as talks continued.

He is believed to have turned down a number of drafts of the deal in order to get his way on certain issues, with one understood to be the club's transfer policy, before reaching agreement.

Benitez has now signed against the continued backdrop of a strained relationship between co-owners Tom Hicks and George Gillett, while the club also recently announced chief executive Rick Parry was to leave the club at the end of the season.

That move increased the likelihood Benitez would commit his future to the club as the Spaniard was unhappy at Parry's slowness in completing transfer deals.

Hicks, who admitted to talks with Jurgen Klinsmann in November 2007 about taking over as Liverpool manager if Benitez left, said: "It is wonderful news that Rafa has made a long-term commitment to the football club.

"Since he became manager in 2004, he has been responsible for the great progress we have made.

"I know he will continue to build on his achievements as he has a tremendous hunger and desire to bring more success to the club - success our fans and everyone connected with the club deserves."

And Gillett added: "With Rafa continuing to manage the team, we can look forward to more great football and success on the pitch.

"He has special abilities and qualities which are admired here at the club and around the world.

"Coming after our excellent wins over Real Madrid and Manchester United, this gives us great momentum going into the final stages of the season."

Benitez has guided the Reds to victory in the Champions League final against AC Milan in 2005 and led Liverpool to victory over West Ham in the FA Cup final in 2006.

They again reached the Champions League final in 2007 but lost out 2-1 to AC Milan.

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