Jamie Vardy is set to agree a new three-and-a-half year contract with Leicester City. The England striker, who has been in talks with the club since just before Christmas, is on the verge of signing an extended and much improved deal that reflects his superb form and emergence as an international footballer.

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In a development that could not be better timed from Leicester’s point of view, with Liverpool visiting the King Power Stadium on Tuesday before games against Manchester City and Arsenal, Vardy will sign a contract that ties him to the club until the summer of 2019.

Vardy, who earns £40,000 a week in a deal that has the best part of two-and-a -half years to run, has been given a significant salary hike. The contract offer also provides a measure of Leicester’s determination to hold on to their key players and to make a statement at a time when they have a wonderful opportunity to finish in the top four and qualify for the Champions League.

While Vardy signed his existing deal only 16 months ago, at that point the 29-year-old had yet to kick a ball in the Premier League, let alone play for his country. Vardy has since won four England caps, after being called up by Roy Hodgson for the first time last May, and he is the Premier League’s leader scorer this season, with 16 goals.

Although Leicester were never going to entertain the idea of allowing Vardy to leave during a transfer window in which they had set out to add to their attacking options, Chelsea and Liverpool are among several clubs to have shown an interest in the former Fleetwood Town forward. Vardy, however, is happy at Leicester, where he enjoys a good relationship with Claudio Ranieri and believes there is a chance to achieve something special this season. Vardy made it clear as soon as negotiations first started that he was keen to extend his stay with the club and has set his sights on trying to write the next chapter in a rags-to-riches story that has captured the imagination to such an extent that it is expected to be turned into a Hollywood movie.

Signed by Leicester for £1m in the summer of 2012 from Fleetwood, who were a non-league club at the time, Vardy has scored 20 goals in his last 34 Premier League appearances, helping Leicester to pull off a great escape at the end of last term and driving them towards the most unlikely title challenge this season.

He became the first player to score in 11 successive Premier League matches when he put Leicester ahead in their 1-1 draw with Manchester United at the end of November, breaking a record previously held by Ruud van Nistelrooy, and looks certain to be part of the England squad in France for the European Championship finals this summer.

While Vardy’s rise to prominence is well documented, the contractual negotiations represented a major challenge for Leicester, who have found themselves in a position that would have been unimaginable 12 months ago, when they were bottom of the league and seemingly heading for an immediate return to the Championship.

Despite their extraordinary success under Ranieri’s managership this season, Leicester are not getting carried away and are determined to keep their wage bill under control, which is a difficult balancing act when they have some hugely talented individuals and there is a realistic prospect that the Midlands club will be rubbing shoulders with Europe’s elite teams next season.

Facebook Twitter Pinterest Jamie Vardy scored in 11 consecutive Premier League matches. Photograph: Plumb Images/Leicester City FC via Getty Images

Leicester’s owners, however, are fiercely ambitious and recognise Vardy’s value to the club and the part that he has played in helping them climb to the Premier League summit.