Carlo Ancelotti received a boost on his first day as Chelsea manager yesterday with the news that Ashley Cole is ready to sign a new contract that is likely to see him end his career at the club.

The England defender has agreed a four-year deal on improved wages of £120,000 a week, which he is expected to sign when he returns to the club for pre-season training next week.

Ancelotti is not due to arrive at Chelsea until the weekend, but on the day that his three-year contract began the Italian will have taken heart from the retention of an individual who is likely to develop into a key player for him. Along with Frank Lampard and Nicolas Anelka, Cole was one of Chelsea's most consistent performers during a difficult campaign last season and at 28 is at the peak of his powers.

Cole believes that his improvement after an erratic start to his career at Chelsea after signing from Arsenal in 2006 is due to being free finally from injury after suffering ankle problems for several years. The club's patience during his settling-in period is one of the main reasons that he has decided to stay. The left back has attracted interest this summer from Barcelona and Manchester City, where he could have earned more money, but he is happy with a deal that puts him just behind Chelsea's highest earners, John Terry and Lampard.

Cole's retention is all the more important because he is the only specialist left back in Ancelotti's first-team squad, although the Italian will gain some cover when the versatile Yuri Zhirkov completes his £18million move from CSKA Moscow in the next few days. The Russia international is likely to play most of his games on the left of midfield, but is also comfortable at left back, as are José Bosingwa, Juliano Belletti and Paulo Ferreira.

Cole is the second Chelsea player to have agreed a new contract this summer after Florent Malouda, the France winger, who will sign a two-year extension to his existing two-year deal next week. The club will turn their attention to securing the futures of those players with one year remaining, chiefly Didier Drogba, who has been offered a three-year contract despite having a four-match Champions League ban over his head.

Joe Cole and John Obi Mikel are also likely to be given new deals as they have only 12 months left on their existing contracts, although Salomon Kalou could be allowed to leave if Chelsea receive a significant offer. The Ivory Coast striker has yet to be approached over a new deal.

Chelsea's negotiations with Inter Milan over the sales of Ricardo Carvalho and Deco have broken down after the Italian club failed to match the asking price. Chelsea want £14 million for the Portugal players, who have three years and one year remaining on their respective contracts, but Inter insist that they are unwilling to pay such a sum.