John Terry has agreed in principle to stay at Chelsea and reject the chance to join Manchester City.

Negotiations over an improved deal will take place once Chelsea return from their pre-season tour of the United States.

Chelsea are expecting Terry to make a public statement about his intentions in the next few days. That would come as a severe blow to City, who had been confident that they would be able to sign the central defender despite the London club’s determination to keep him.

The news will no doubt delight Carlo Ancelotti, the Chelsea manager, who has revealed that his main task is to develop the “identity” of the team that club owner Roman Abramovich craves.