Wilkinson played in Newcastle's 22-19 win over Saracens on Sunday

"We're talking and those talks will continue in the new year," said the Newcastle director of rugby.

"We're due to meet with his management in early January and we've no reason to believe he won't sign.

"Ultimately he's got to do what's best for him, but he's on record as saying he loves the region, the way we play and where we're going."

Wilkinson's mentor Steve Black recently left Newcastle, raising doubts about the England fly half's future at the club.

However, Wilkinson subsequently told the BBC he was happy at Newcastle, although he added he had yet to make his mind up over his future.

Wilkinson, who was born in Surrey, joined the Falcons after leaving school in 1997.

He made an instant impact, helping the club win the Premiership title in 1998. They also won the Powergen Cup in 2001 and 2004.

He has excelled on the international stage, kicking the winning drop-goal for England at the 2003 World Cup and playing a major part as they reached the 2007 final before losing to South Africa.