Tim Sherwood has been appointed as André Villas-Boas's permanent successor at Tottenham Hotspur on an 18-month contract after a day of negotiations with the chairman, Daniel Levy. The 44-year-old had been hastily promoted from his post as the club's technical co-ordinator last Monday, following Levy's decision to sack Villas-Boas after an erratic period, and Sherwood made it plain that he did not want a mere interim appointment.

His managerial CV extends no further than two matches – the Capital One Cup quarter-final defeat at home to West Ham United last Wednesday and the Premier League victory at Southampton on Sunday – and his ambition to be granted a long-term and full-time deal seemed at odds with Levy's desire to recruit a big-name successor to Villas-Boas.

Levy was in contact with the Holland manager, Louis van Gaal, over the weekend and the Dutchman raised Tottenham's hopes by saying that it had always been an ambition of his to manage in England. Van Gaal also said that he would not job-share between a club and his country, meaning that he would not become available for Tottenham, or anybody else, until after the World Cup finals next summer.

This had raised the prospect of Sherwood continuing as the Tottenham manager until the summer but, in the talks with Levy on Monday, he said that he wanted a more secure deal to implement his ideas at the club he had previously captained. He has got his wish, with the club announcing that he had been "appointed head coach with a contract to the end of the 2014-15 season". It is unclear whether Sherwood's deal contains any break clauses on either side.

Levy said: "We were extremely reluctant to make a change mid-season but felt we had to do so in the club's best interests. We have a great squad and we owe them a head coach who will bring out the best in them and allow them to flourish and enjoy a strong, exciting finish to the season. We are in the fortunate position of having within our club a talented coach in Tim Sherwood. We believe Tim has both the knowledge and the drive to take the squad forward."

Sherwood has his level one, two and three coaching badges, plus the Uefa A and B licences but he must now obtain the Uefa Pro Licence, which is a prerequisite for Premier League managers. He must demonstrate a commitment to sign up for a Pro Licence course by Monday 10 March; the League's deadline is 12 weeks after a manager is promoted to the role.

Sherwood will be assisted by Chris Ramsey, Les Ferdinand and Steffen Freund, Villas-Boas's former No2. It has been a chaotic season for Tottenham, with Villas-Boas eventually losing his grip and becoming the eighth manager dismissed by Levy at White Hart Lane. But the 3-2 win at Southampton, which was marked by Sherwood's attacking selection and the recalled Emmanuel Adebayor's goals, meant that the club moved to only six points off the title pace.

The mission to fire their hopes further resumes at home to West Bromwich Albion on Boxing Day.

Sherwood, whose playing career was defined by three England caps and the Premier League title with Blackburn Rovers in 1995, was brought on to the Tottenham staff by the former manager Harry Redknapp in October 2008. He initially worked on a part-time basis but he quickly impressed with his knowledge and eye for a player. He assumed responsibility for all of the youth teams when he was appointed as the technical co-ordinator.