Juan Pablo Montoya is poised to stay with the Williams Formula One team at least until the end of 2004 after they extended his contract.

Montoya will be paid �4.5m a year, according to The Guardian, in a deal that closes the door on any return by Jenson Button to Williams for the next two years.

Montoya's team-mate, Ralf Schumacher, is also contracted to Williams until the end of 2004.

Confirmation that Williams have taken up their option on Montoya's services beyond the end of this year has been expected for some time.

But Williams are still not prepared to comment on whether they had actually done so yet.

It is expected that Montoya's contract will run at least until the end of 2004 - when the team's engine supply contract with BMW runs out - and that there will be options beyonf that.

BMW has not yet decided whether to continue in F1 beyond the end of its existing deal with Williams.

Montoya's new contract would put him in prime position to replace Michael Schumacher at Ferrari in 2005, should the German leave the Italian team at the end of his current contract.

Ferrari earlier this year enquired about Montoya's contractual position as they weighed up their options for life post-Schumacher, as BBC Sport Online revealed.

Continuing rumours that Schumacher could quit at the end of this year appear to be incorrect - Montoya would be Ferrari's first choice if the world champion was to retire.

Button is in a difficult position as he looks for a drive in 2003.

It is strongly suspected that his Renault team want to replace him with their test driver, Fernando Alonso, who is also managed by Renault boss Flavio Briatore.

But there is new speculation emerging that in fact he might be able to stay after all - and that word of his removal is being put about in an attempt to lower his salary for 2003.

If Button does leave Renault, the favourites to land him are Toyota and Sauber.

Toyota, new to F1 this year, are in demand after some impressive performances. Scot Allan McNish is considered more vulnerable there than Mika Salo.

At Sauber, Brazilian Felipe Massa's place is at risk. He has shown good speed this year but sources say that team boss Peter Sauber feels he makes too many mistakes.

Button has also had talks with Jaguar, but he is considered unlikely to want to go there following the disastrous performance of their revised car at the British Grand Prix.