Toshack has been in charge of the national team for four years
The Football Association of Wales is confident that manager John Toshack will sign a new contract next month.
"It is expected that the national manager's contract will be formally discussed at the next board meeting," said FAW spokesman Ceri Stennett.
Toshack, 60 in March, will come to the end of his current five-year deal when the World Cup qualifiers for South Africa 2010 conclude in October.
Wales currently sit third in World Cup qualifying Group Four.
They are four points behind leaders Germany after two wins and two defeats.
The FAW has wanted to extend Toshack's contract for some time, and the only doubt has been whether the former Liverpool striker wants to continue.
But Toshack has now told the FAW that he would like to carry on for another two years, taking his term up to the Euro 2012 tournament in Poland and Ukraine.
"We have been very happy with the way John has changed things around with so many good young players coming through," said Stennett.
"The board have always been happy to abide by his decision, the contract extension has not really been an issue."
Wales' next match is a friendly against Poland to be played in Portugal's Algarve on 11 February.
Poland have invited Wales to provide the opposition for their training camp ahead of the next round of World Cup qualifiers in March.
Toshack is by then expected to have put pen to paper on a new deal that will take his spell as Wales boss to seven years, by when he hopes to have achieved his goal of guiding Wales to a major tournament.
Qualification for South Africa is unlikely, but with the finals of Euro 2012 set to be enlarged to include 24 teams, Toshack believes his emerging young side could well reach that tournament.
Wales may also have an Under-21 friendly on 10 February away to Northern Ireland as they prepare for the Uefa championship qualifiers for 2011, due to start in March.
Their impressive exploits in the previous campaign, which saw them reach a play-off with England after winning their group, now sees Wales awarded with a second-place seeding for the draw in Denmark on 4 February.
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