The Sunday Mirror says the 28-year-old midfield star is out of contract at the end of the season and the club want to ensure there is no danger he could leave.
Cole has impressed boss Carlo Ancelotti with his enthusiasm and dedication as he recovered from a serious knee injury.
The Italian plans to use him on a more regular basis.
Cole's advisers have been in talks with the club for the last month.
A Chelsea insider said: "It has all been very positive. Joe wants him to stay and so do the club. We are very optimistic there will no problem."