Portuguese determined to clinch the Champions League with Spanish side.
Jose Mourinho to stay with Real Madrid next season
Mourinho had repeatedly evaded questions on his future since his January decision to leave was made public, but after Wednesday's Champions League semi-final loss to Bayern Munich he stated his intention to continue at Madrid.
According to sources close to the manager, Mourinho's desire to leave Madrid was motivated by dissatisfaction with the behaviour of the capital's media, the attitude of some of the club's Spain internationals, and the club's reluctance to fully support his attempt to return them to the summit of the European game.
He has been happier with some of those matters during Madrid's run to last weekend's Camp Nou defeat of Barcelona that effectively decided the Spanish title.
Though the 49 year old travelled to London at the end of February to buy a new house for his family in preparation for a change of employment, proposals from various Premier League clubs were flawed.
Tottenham Hotspur wanted Mourinho to succeed Harry Redknapp should he leave for the England job, but are now struggling to qualify for the Champions League as the Football Association look for a more rounded successor to Fabio Capello.
Mourinho could have been tempted to manage Chelsea again were he offered full control of the football side of the club.
Roman Abramovich, however, routed an approach through a personal assistant, which included the insulting condition that Mourinho dispense with the services of trusted goalkeeping coach Silvino Louro.
Manchester City's resolve to continue with Roberto Mancini regardless of the outcome of their ongoing Premier League title chase removed another potential vacancy.
Instead the Portuguese will implement a summer reinforcement strategy for Madrid that he began working on even while representatives were canvassing managerial offers from England. Mourinho has also secured new contracts for his four assistants coaches.
Rui Faria, Aitor Karanka, Jose Morais and Silvino will receive improved salaries, though the term of their revised deals remains unaltered, running until the summer of 2014.
Mourinho is determed to become the first manager to win the Champions League with three different clubs.
"I will absolutely try to win this title again with this team," Mourinho said. "I want to win with these players. It was important for the club and for us to win the Copa del Rey last season. We need six points to win the league and it would be fantastic to do so.
"This team has great room for improvement and so does the club. Clubs have to adapt to the times. If they believe I can continue to add to the team by staying on, and my players believe so too, then I feel I will stay."
Having broken Barcelona's long dominance of Spanish football, Mourinho is likely to face a new direct opponent at Camp Nou next season.
According to sources close to Pep Guardiola, the Barcelona coach is on the point of informing his players that he will step down next month when his contract expires.
Guardiola is said to be "95 percent certain" to quit, citing the intense demands of the position and a desire to devote more time to his family. Barca president Sandro Rosell is continuing attempts to persuade the Catalan to remain in place for another year.
While Guardiola is intent on leaving Barcelona, he has yet to completely rule out the possibility of coaching elsewhere next season. An approach from the English Football Association to succeed Fabio Capello has been received and - given the reduced day-to-sat demands of national team management - is not without appeal.
Athletic Bilbao coach Marcelo Bielsa and former Chelsea and FC Porto coach Andre Villas-Boas have been mentioned as candidates to replace Guardiola.
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