The 64-year-old Italian has two years left on his current City contract after joining last summer.
But the club’s Thai owners have moved to reward him for guiding them to an incredible Premier League title success despite odds of 5,000-1.
His achievements earned him the League Managers’ Association’s annual award in May. Ranieri has previously stated he hoped to sign a new long-term contract at The King Power Stadium as he wanted to finish his career with City.
The deal is expected to see Ranieri double his salary from his current terms of around £1.5million-a-year.
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