The Sun says the contract will be signed in the summer and keep him a Manchester United player until he is 35.
Scholes put United into this year's final with a wonder winner against Barcelona.
Boss Alex Ferguson is delighted with the way he and sub Ryan Giggs, 34, have looked after themselves.
Fergie said: "I can no longer see an end to their careers.
"They must be the best two players I've ever had."
Scholes' current £75,000-a-week deal runs out at the end of next season.