The report claims the Magpies hope the £80,000-a-week new deal - including bonuses - will be enough to warn off interest from Liverpool boss Brendan Rodgers.
The Frenchman was linked with the Anfield club over the summer, and the Reds were likely to go back in for him in the January transfer window.
Paris St Germain were another club thought to be interested in the talented number 10. And with his current Newcastle deal set to expire at the end of next season, Alan Pardew wants to tie him down to a new long-term contract.
The report claims Newcastle submitted the proposed contract offer to Ben Arfa's agent earlier this week - it reportedly doubles his current £40,000-a-week deal and runs for four years.
The playmaker is one of the club's best match-winners and proved his worth with a stunning winner in the 86th minute against Fulham last time out at St James' Park.
Liverpool were busy over the transfer window, recruiting Luis Alberto and Iago Aspas from La Liga and Mamadou Sakho and Tiago Ilori from Paris St Germain and Sporting Lisbon respectively.