Rossi has won only one out of five MotoGPs race this year

Rossi, 27, extended his contract that runs out at the end of this season and will stay at the Japanese outfit for the new era of 800cc racing in 2007.

"I believe I've made the right choice", said the five-time world champion.

"I'm very pleased to be staying with Yamaha next year. I am very excited about the challenge of a new class of racing with Yamaha next year."

Yamaha were also delighted by the decision of Rossi, who has been having a hard time in MotoGP this season.

We are confident that Valentino can recover from an unlucky start to his title defence Yamaha Motor Racing managing director Lin Jarvis

The Italian is lying eighth in the standings with just one win in five races as the teams head to his home Grand Prix in Mugello this weekend.

"Yamaha and Valentino have an excellent relationship and we have enjoyed great success together since our partnership was born in 2004," said Yamaha Motor Racing managing director Lin Jarvis.

"His input will be invaluable and we believe we will be able to challenge to win the title next year with the new bike.

"In the meantime our short term goal is to provide him with the means to defend his MotoGP title this year.

"We are confident that Valentino can recover from an unlucky start to his title defence, starting at our Factory Team's home race in Mugello this weekend."