The Portuguese put the Blues on alert last month when he said he would hold talks with chief executive Peter Kenyon over his future after Euro 2008, having confessed he wanted to work with Jose Mourinho again at Inter Milan.

The 30-year-old went away on holiday following Portugal's quarter-final exit and returned to training last Thursday and has since had the chance to hold talks with new boss Luiz Felipe Scolari.

Carvalho is a huge fan of Scolari, having worked with him for five years in his role as Portugal coach, and is now happy to stay.

He said: "Now I am back it is good to see all the people again, fighting for the club together like we have for the past few years."