Chelsea defender Reece James admits he is "living the dream" after signing a new long-term contract.

The 20-year-old, who began training with the club at the age of six, has established himself as competition for Cesar Azpilicueta at right-back under Frank Lampard despite missing the first three months of the season with an ankle injury.

Having first signed forms to officially join Chelsea's academy at under-nine level, a new five-and-a-half-year senior contract for James is the realisation of long-held dreams.

"It is a great moment for me and my family. I've been at Chelsea since I was a young kid and to extend my contract is a great feeling," he told Chelsea TV.

"When you are that young you don't think too far ahead, you just play week in, week out and then as you gradually get older you start to realise it is getting closer and closer.

"There are a few of us playing in Chelsea's first team now that have all come through the academy at the same time and that is great, it shows how well the academy has brought us through and how well we are doing.

"It has been my dream to be here at Chelsea and play week in, week out and to have a contract for another five-and-a-half years is living the dream again."

James has made 18 appearances this season, scoring on his debut in the Carabao Cup victory against Grimsby and netting the equaliser in a dramatic 4-4 Champions League draw at home to Ajax.

Chelsea director Marina Granovskaia is looking forward to their academy graduate progressing further having signed his new deal.

"The smooth way Reece has fitted into the team so quickly despite missing the start of the season has been clear for everyone to see," she told the club's official website.

"And the fact another exciting young player is part of the future of the club is a result of great work by our academy, our loans department, our new coaching staff and of course the player himself.

"Reece started his football education with us at the age of six and his performances on loan at Wigan last season paved the way for a strong beginning to his career in the Chelsea team.

"We are very pleased he now has the perfect opportunity to build on that and become a major player for us for many years to come."