The 30-year-old has impressed since joining the club on a non-contract basis and turned down a move to the United States in order to stay at Deepdale.

The Scotland international, who has had spells with Celtic and Aberdeen, was released by cash-strapped Derby earlier this month.

We don't feel at 30 it's excessive to offer him a two-and-a-half-year deal. Derek Shaw, Preston chairman

"I think he was released due to cost cutting measures at Derby," said Preston chairman Derek Shaw.

"I am sure they would have liked to have kept him.

"He will still improve, as he's not had a lot of football this year."

Shaw admitted that O'Neil's age had been a concern, but he insisted that the club had made the right decision in offering him a longer-term contract.

He told Preston's website: "Originally, we were a little concerned about his age and talked about a one-and-a-half-year deal.

"But he was looking for the extra security which you can understand.

"We don't feel at 30 it's excessive to offer him a two-and-a-half-year deal.

"People like Gary McAllister are still playing at 38 and 39. These lads look after themselves and hopefully we'll get good service from him.

"Brian is the right type of player to have in the football club."