Wurz has rejected the chance to return to racing

It removes one rival in the way of Briton Justin Wilson's chances of remaining as Jaguar's second driver.

Wurz said: "It is no secret that I have been on the shortlist for the second race seat at Jaguar Racing, which has been a privilege.

"However, I believe McLaren offer me the best future."

Wurz's decision leaves Wilson fighting off experienced Dutchman Jos Verstappen and rising stars Christian Klien and Townsend Bell for the Jaguar drive.

Austrian Klien and American Bell have been testing for the team at Valencia this week.

Jaguar are understood to want a driver who can bring his own sponsorship to partner Mark Webber.

Jaguar have been assessing young talent this week

Klien is said to have backing worth as much as �8.7m while Verstappen is also believed to have put together a sponsorship package in Holland.

Former Benetton driver Wurz was also capable of taking money to Jaguar, but preferred to stick with McLaren, where he will share testing duties with Spaniard Pedro de la Rosa.

McLaren managing director Martin Whitmarsh said: "Alex's contribution during the past three years has been immense and everybody in the team is pleased that our relationship will continue.

"We knew that there were opportunities for Alex to get back into racing and would have supported him in whatever decision he made.

"However, the fact that he will remain with the team is positive and will help to further emphasise our challenge for the 2004 F1 world championship."

Wurz has little chance of grabbing a race drive with McLaren in the future.

The team have already signed Juan Pablo Montoya from Williams for 2005, and Finn Kimi Raikkonen is expected to stay on as his team-mate.