Reigning F1 World Champion Lewis Hamilton has agreed a new contract with Mercedes AMG F1 team after months of speculation and wrangling between the team and the driver.

The 2014 contructors' champions confirmed via Twitter on Wednesday that the driver has agreed to a three-year deal that will see him remain with the Silver Arrows team at least until the end of the 2018 season.

"CONFIRMED: 3 more years for Lewis Hamilton! Mercedes Benz is my home" the 2015 F1 world championship leaders tweeted.

The Briton has been in discussions with the team since last season, with talks being constantly pushed by the team and the driver. Hamilton has been negotiating the contract on his own after splitting from his management team, and it has been close to completion since the start of the season.

Mercedes boss Toto Wolff had also hinted that they are looking at replacements if Hamilton did not extend his deal and named Fernando Alonso as his preferred choice.

However, the two-time world champion finally committed his future to his team and ended speculation that he could move to Ferrari to partner Sebastian Vettel next season.

Hamilton expressed delight at extending his deal, and also revealed that if he remains with Mercedes until the end of his deal, it will mean that he has spent 20 years of his racing career with the German carmaker.

"I am very proud that this contract means I will mark 20 years with Mercedes Benz in 2018," the team added on the social networking site.

Hamilton joined the team in 2013 after spending his entire career with McLaren-Mercedes and won his second title and the first with Mercedes last season ahead of teammate Nico Rosberg.

The former McLaren driver, has started 43 races for his current employers, getting 26 podiums, 15 wins and 1 World Championship.

According to the Mirror, the Mercedes driver is set to become the highest paid British athlete as the report claims that he is going to earn £100m over the next three-years.