"Confidence in Jagoba is total. He is 35, he is a part of the family at this club and we are convinced as to his ability and that he will get better with experience," said the Basque club's president Jokin Aperribay at a press conference.

Arrasate, whose existing deal was due to expire at the end of this season, is still hopeful of leading the team into Europe.

They currently sit seventh, in the last available Europa League qualifying spot, seven points clear of Valencia in eighth with five matches left.

Arrasate was promoed from his role as assistant last summer to replace Frenchman Philippe Montanier, who returned to his home country to coach Rennes.