O'Neill said: "If Stiliyan could commit himself to a new contract, I'd be delighted.
"Contract talks are going pretty okay. Of course, nothing is ever okay until someone has actually signed on the dotted line. But we would like him to stay.
"We are waiting to hear back (from his advisors). The discussions have been going on very amicably. We would hope to be continuing those discussions very shortly."
O'Neill added: "It is only just a year ago that people were concerning themselves about whether Stiliyan had a future here.
"But he has battled back, so much so that I'd like him to be around here for the next couple of years.
"If every person shows the same determination and willingness and drive that Stiliyan has shown during the last year, it would be brilliant.
"He has shown consistency and self confidence. He had a lot to overcome and he has gone on to show he is the player I thought he was capable of being. He has shown great character."