The announcement was made by the club on Monday.

Postecoglou has guided Yokohama to within reach of the top flight title and they sit second on the ladder with just three rounds left in the season.

They trail leaders FC Tokyo, who they host on the final matchday, by one point.

The news comes after Yokohama scored a 4-2 victory over Consadole Sapporo on Saturday, setting up an exciting end to the season.

The 54-year-old Postecoglou is wildly popular in Yokohama for driving the five-time champions to within reach of a first success since 2004 with minimal funding as a foreign coach, as well as establishing an exciting brand of attacking football.

It's an impressive improvement for the club who finished 12th last season and narrowly avoided a relegation play-off in Postecoglou's first campaign and he could attract attention from European clubs for his feat.

Postecoglou dramatically walked away as coach of the Socceroos just seven months before the 2018 World Cup in Brazil. He famously guided the team to the 2015 Asian Cup final.

He has previously claimed titles with South Melbourne in the National Soccer League and Brisbane Roar in the A League.