Chelsea are set to hand promising young star Nathaniel Chalobah a new contract to ward off interest from rivals Arsenal.

According to the Evening Standard, the Stamford Bridge club have become aware of growing interest in the 18-year-old, especially from their north London rivals at Emirates Stadium.

Last month Arsenal were reported to be preparing to lure Chalobah away from the Blues with the promise of greater chances of first team football.

This latest report claims Chelsea are keen to stop any such scenario playing out and will offer the England under-21 international improved terms.

The Blues want tie him down to a new deal as his current agreement expires in the summer of 2014 and allowing it to run down could put them in a weak bargaining position.

Chalobah is currently on loan with Championship side Watford, where he has impressed many with his displays playing for Chelsea legend Gianfranco Zola.

In his spell with the Hornets he has shown an ability to play in either defence or midfield and a maturity that belies his age.

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