AC Milan goalkeeper Gianluigi Donnarumma, regarded as the greatest prospect in his position in world football, has agreed an extension to his contract keeping him at the San Siro until 2021, the club announced on Tuesday.

"We continue together! AC Milan and Gianluigi Donnarumma have reached an agreement to extend the goalkeeper's contract through to 2021," read a statement on the club's website.

The 18-year-old will officially sign the new deal on Wednesday.

His previous deal had been due to expire in 2018 and he had announced last month that he would not sign an extension, to the immense disappointment of the club's board.

At the time, it was suggested that Milan were offering the player a new deal with an annual salary of five million euros ($5.7 million).

Milan fans had reacted to his initial refusal to accept those terms but unveiling a banner reading "Dollarumma" as the player turned out for Italy at the under-21 European Championship in Poland. They also threw false bank notes at him.

Donnarumma made his debut as a 16-year-old in October 2015 and has already been capped four times at full international level by Italy.

He is tipped to succeed Gianluigi Buffon, the Juventus legend who is expected to retire at the age of 40 after next year's World Cup in Russia.