Lewis Hamilton has committed his Formula One future to Mercedes by signing a new two-year deal.

The contract extension, announced ahead of Sunday’s Austrian Grand Prix, will see Hamilton, 36, remain with the Silver Arrows until at least the end of 2023.

Hamilton’s new deal is understood to be worth £40million a year.

The British driver, who trails Max Verstappen by 18 points in his bid for a record-breaking eighth world title, moved from McLaren to Mercedes in 2013.

He said: “It is hard to believe it’s been nearly nine years working with this incredible team and I’m excited we’re going to continue our partnership for two more years.

“We’ve accomplished so much together but we still have a lot to achieve, both on and off the track.

“I’m incredibly proud and grateful of how Mercedes has supported me in my drive to improve diversity and equality in our sport.

“They have held themselves accountable and made important strides in creating a more diverse team and inclusive environment.”

Both Hamilton and Mercedes team principal Toto Wolff were desperate to avoid a repeat of last year’s protracted talks when a one-season deal was finalised only six weeks before the start of his championship defence.

Hamilton’s 12-month extension included a pay cut from Mercedes following the financial implications of Covid-19.

But it is understood his new deal will move him back to the level of earnings pre-coronavirus, making him in the region of £80m over the next two years.

Hamilton continued: “Thank you to all the dedicated and talented individuals at Mercedes whose hard work makes it all possible and the board for their continued trust in me.

“We’re entering a new era of car which will be challenging and exciting and I can’t wait to see what else we can achieve together.”

Mercedes have won the past seven drivers’ and constructors’ titles, but after eight rounds Verstappen leads Hamilton in the individual standings with Red Bull 40 points ahead in the team championship. Next season’s cars will be radically different following major changes to F1’s regulations.

Wolff, who has overseen Hamilton’s remarkable run of success which has seen the Briton win six of the last seven championships, added: “As we enter a new era of F1 from 2022 onwards, there can be no better driver to have in our team than Lewis.

“His achievements in this sport speak for themselves, and with his experience, speed and race-craft, he is at the peak of his powers.

“We are relishing the battle we have on our hands this year – and that’s why we also wanted to agree this contract early, so we have no distractions from the competition on track.

“I have always said that as long as Lewis still possesses the fire for racing, he can continue as long as he wants.”

Resolving Hamilton’s future will allow Mercedes to determine who occupies their second seat next season.

Valtteri Bottas’ deal expires at the end of the year, and Briton George Russell, a Mercedes junior driver, is in the frame to replace him.

Russell, 23, who stood in for Hamilton at last year’s Sakhir Grand Prix, believes he will find out if he has landed one of the hottest seats on the grid before the summer break.

However, Hamilton made clear at last weekend’s Styrian GP that his preference would be for Bottas to stay.

In response to Hamilton’s new deal, Bottas tweeted: “Congrats. Well deserved.”

Russell posted: “The GOAT. Great news for Mercedes and for F1. Congrats man.”