Arsenal manager Arsene Wenger is confident Theo Walcott will sign a new deal at Emirates Stadium and admitted the two parties are close to coming to an agreement by the end of the January transfer window.

Walcott’s current contract runs out at the end of the season and he is already permitted to speak with clubs out side of the Premier League with regards to a free transfer come the summer.

Now Arsenal appear close to finalising a deal with the 23-year-old, as Wenger revealed he is becoming increasingly confident that business will be wrapped up very soon.

"I am optimistic we will get to a happy conclusion. I was optimistic last week but I'm a bit more optimistic this week,” he told reporters on Friday.

The Frenchman was then asked if Walcott would be tied down to a new deal before the end of the month.

"Yes. We're on a good road,” was his reply.

Recent reports have suggested the breakthrough was made when Arsenal put together a deal worth £25million over five years, after having an offer of £75,000 per week rejected as Walcott’s representatives wanted something closer to £100,000 a week.

The former Southampton youngster has often voiced a desire to play in a more central attacking role at Emirates Stadium, which led to speculation that his lack of opportunities theere may be holding up the deal but Wenger denied it.

“I believe Theo can have a preference maybe to play through the middle, but first of all he never made a conditions of that to extend his contract. Certainly I would not accept it,” added Wenger.

"Secondly, he was always happy when he plays - on the flank or through the middle? I see him playing more up front."

Walcott is Arsenal’s top scorer this season with 14 goals and has recently been deployed at centre-forward, but has experienced mixed results.

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Theo Walcott