By Wayne Veysey | Chief Correspondent
Walcott and his representatives held a final round of talks, which included manager Arsene Wenger and chief executive Ivan Gazidis, at the club's London Colney training base on Wednesday, where the 23-year-old accepted the offer of a £30,000-a-week pay rise.
Under the new agreement that runs until the summer of 2017, the England international's salary will climb to around £90,000-a-week, which will be bolstered by top-up bonuses and a multi-million pound signing-on fee.
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Walcott had indicated his desire to stay at the Emirates Stadium after being verbally offered the improved package by Arsenal during fruitful discussions over the last fortnight.
He has also been encouraged that Wenger has lived up to his promise of giving him opportunities to play in his favourite centre-forward role.
Walcott has started Arsenal's last five matches up front, scoring four goals, including a hat-trick against Newcastle United. Despite being regularly overlooked by Wenger in the first three months of the season, he leads the club's scoring charts with 14 goals.
Walcott's preference has always been to stay at the club, where he is popular both among staff and with the other players.
Arsenal are confident they will be able to announce Walcott's new contract imminently, which will then allow Wenger to concentrate on reinforcing Arsenal's squad.
Securing Walcott's future will be a huge boost to Arsenal after tying fellow Brits Jack Wilshere, Alex Oxlade-Chamberlain, Kieran Gibbs, Aaron Ramsey and Carl Jenkinson to new five-year deals shortly before Christmas.