Davies has been an instant success at Derby

Davies has been rewarded for steering the Rams into the Premiership and his deal will now run until 2010.

There was speculation over the future of the Scot after the play-off final win over West Brom but those fears will have been allayed by the new deal.

"This is very good news and I would say it is like a new signing," chairman Peter Gadsby told the club's website.

Interview with Billy Davies

Davies switched from Preston to Derby in June 2006 and guided the club to promotion into the top-flight in his first season.

But, in the wake of the 1-0 play-off final win, he hinted at a rift with the board after they failed to appoint David Kelly as his assistant.

We are very keen to open up the European market for players Billy Davies

Gadsby has been in talks with Davies over the "last few weeks" and has succeeded in persuading Davies to stay.

Davies has now appointed Canadian Colin Miller as first-team coach and former Scotland boss Craig Brown as football consultant.

Davies was assistant to his fellow countryman at Preston before taking over as manager in August 2004 and spending nearly two years with the Deepdale club.

"Craig Brown has a wealth of football contacts and football knowledge which I am keen to tap into," said Davies.

"We are very keen to open up the European market for players and Craig will be invaluable in helping us exploit that market.

"I've also appointed Colin as first-team coach, somebody whose career I have followed very closely.

606: DEBATE This news ought to silence the doubters for good RR

"He's a fantastic coach with coaching experience across the world.

"His day-to-day role will primarily be an assessment of our opposition - their strengths and weaknesses.

"But, on top of that, I see the United States and Canada as a marketplace for players which is so far under-developed and with his knowledge of the game over there and his contacts, Colin can help me exploit that."

Derby were in the automatic promotion places in the Championship for much of last season but were overtaken by eventual champions Sunderland.

Birmingham managed to secure the second automatic slot while Derby fell away into the play-off berths.

Davies rallied his side to overcome that disappointment and secure the club's return to the Premiership for the first time since the 2001/2002 season.