McClaren, who has been linked with a return to England, has been in talks with Twente officials over a contract extension at De Grolsch Veste.
Twente have enjoyed a fine start to the current campaign and currently sit at the top of Eredivsie and the club are keen to reward McClaren for his efforts.
McClaren's representative, Colin Gordon, has confirmed a deal has been agreed with just a few minor issues to be resolved.
"A new deal for Steve has been agreed," Gordon told skysports.com.
"It is a rolling contract and there is just a bit of paperwork to be completed before it is finalised
"Steve is enjoying things at Twente and they are flying at the moment."