Gregan is six caps from David Campese's Wallaby record of 101

The 30-year-old scrum-half led his side to a 20-17 extra-time defeat against England in last month's World Cup final.

"This decision was always going to be made after the World Cup," Gregan said in a statement.

"I'm very happy to play another year and look forward to making my best possible contribution."

Gregan has played 95 tests and was part of Australia's World Cup winning side in 1999.

Australian Rugby Union high performance manager Brett Robinson said: "George has achieved so much both on and off the field.

"And his form during the World Cup showed that he is still one of the best scrum-halves in world rugby.

"There are some players who would feel there is nothing more to achieve after captaining their country in a World Cup.

"But George is a very motivated guy who loves his rugby, so it is great to have him back for 2004."

The Wallabies are set to host Scotland for two tests and world champions England once in the middle of next year.