Newcastle United boss Kevin Keegan is ready to hand winger James Milner a new contract.

The Mirror says Milner is staying at Newcastle after Keegan turned down Aston Villa's £9million bid and promised the unsettled winger a new deal.

The offer from Villa boss Martin O'Neill tempted Newcastle owner Mike Ashley, who wants to raise funds to finance Keegan's rebuilding project.

But the manager insisted at a meeting on Thursday that Newcastle must not sell their best young talent if they are to become a top-flight force again. Milner, 22, who spent the 2005-06 season on loan at Villa, is set to earn a new contract to improve his £30,000-a-week terms.