Portugal's Brazilian-born coach Luiz Felipe Scolari has had his contract extended until 2008, the country's soccer federation said on its website on Friday.
Scolari steered Portugal to fourth place in the World Cup finals in Germany.
"The Federation management approved the extension of the contract with Luiz Felipe Scolari and his technical aides," the federation said.
"The new agreement is between August 1, 2006 and July 31, 2008."
After 11 wins and a draw, Scolari's record unbeaten World Cup run as a coach came to an end when France beat Portugal 1-0 in the semi-final of the tournament.
Scolari, known as 'Big Phil', has been hailed as a national hero in Portugal for taking the side to the final of Euro 2004 at home and leading them into the last four of the World Cup this year.
In April, Scolari appeared on the verge of taking over from Swede Sven-Goran Eriksson as England coach after talks with the Football Association (FA).
But the Brazilian, who led his home country to World Cup victory in 2002, withdrew from contention citing media intrusion.
The next step for Scolari will be to qualify Portugal for the 2008 European Championship.
