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Theo Walcott will be presented with a stunning £25m five year contract offer by Arsenal this week.

Gunners boss Arsene Wenger has finally decided to make an improved offer worth £90,000-a-week plus a signing-on fee when formal talks resume in the next 24 hours.

It is the biggest step forward in negotiations since talks stalled in August when Walcott was given a “take-it-or-leave-it” ultimatum on a new deal worth £75,000-a-week.

But Walcott has clearly proved his value in Wenger’s eyes and Arsenal are optimistic they will reach an agreement. It is unlikely to be signed imminently but there is a feeling they are getting close.

It will put Walcott on top of Arsenal’s pay league as although Andrey Arshavin is also earning £90,000-a-week, the England international will receive a payment for agreeing his new deal.

Gunners skipper Thomas Vermaelen was given a £3m fee when he signed his new contract.

Walcott held peace talks with Wenger last month as the England forward asked for reassurances over his future, contract and the club’s long term plans.

(Image: Getty Images)

Wenger granted Walcott his wish of playing as a central striker in his next match against Reading and his recent run of form up front has clearly persuaded Arsenal to increase their offer.

Walcott, 23, has always insisted he wants to stay at Arsenal even though he was frozen out of the starting line-up in the Premier League and Champions League for nearly three months.

But Walcott has played his way back into favour and Arsenal are hoping the long-running contract saga will be resolved.

Chelsea, Liverpool and both Manchester heavyweights have both shown an interest but Walcott now seems likely to remain at the Emirates, even though he could get a bigger deal if he ran down his contract and became a free agent at the end of the season.

(Image: Getty)

It will be a huge boost for Arsenal especially as their prime striker target, Barcelona forward David Villa, was yesterday told he would not be allowed to leave the Nou Camp in January.

Barcelona president Sandro Rosell said: “I completely rule out the transfer of Villa during the winter market. He is ours and we need him, there is a lot of the season left.”

Arsenal may not give up hope as Villa only has 18 months left on his deal, is 31 and has a long injury record and therefore his value is beginning to decrease dramatically.

Wenger has already missed out on Schalke’s Klaas Jan Huntelaar and Demba Ba while negotiations are not believed to be particularly close on any new signings at the moment even though the Arsenal boss insists they are in the market for players.

The £14m price of Atletico Madrid’s Adrian Lopez appears to have put them off while Anderlecht’s Argentina midfielder Luca Biglia is believed to be on their list.