Arsene Wenger will be handed a reported £40m transfer budget in the lead-up to the January transfer window, with the Arsenal manager set to renew his contract with the club.

During the summer, Wenger was handed a large amount to spend but held out until deadline day to part with any money. Eventually, fans' dissatisfaction was quelled by the last-minute signing of top midfielder Mesut Ozil from Real Madrid.

The Daily Mirror now claims that Wenger will be given the opportunity to spend big again in the winter transfer window, with the board happy to pay over the odds for players if they help improve the fans' mood further and push Arsenal - finally - to challenge for silverware.

Ozil has claimed that it is his goal to help the club break their trophyless spell, but Wenger may still feel he needs a big-name striker to complement his classy German acquisition.

The Gunners submitted two bids for Luis Suarez that were swiftly rejected by Liverpool, and let target Gonzalo Higuain go in the process, with the Argentine eventually joining Serie A side Napoli.

But the acquisition of Ozil - who has publicly said that Arsene Wenger was the reason he wanted a move to north London - has reportedly made the board decide that they definitely want to keep Wenger beyond the end of his current contract, in 2014.

The prospect of Arsenal's youngsters becoming disillusioned if Wenger were to leave is also reportedly a big part of their thinking: Jack Wilshere is said to be prepared to reconsider his future if the manager moves elsewhere.

The Sun claims that Arsenal will hand Wenger a new two-year deal worth around £7.5m per season. The manager has always said he is happy at the club and now that fans are back on side, negotiations are likely to proceed without a hitch.