The Gunners boss says there is urgency in securing a new deal before the England winger is free to talk to other clubs in January with his current contract set to expire in 2013
The 23-year-old has seen his position in the team under threat thanks to the arrivals of Lukas Podolski and Olivier Giroud, as well as the re-emergence of Gervinho as a first-team regular.
Walcott has stated previously that he wants an opportunity in the centre of the team's attack - something promised to him by Wenger - but is free to talk to other teams in January if there is no change in circumstances.
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"He loves to score goals, he has good pace and makes intelligent runs. He is a good finisher."
Arsenal face a tough task this weekend with a trip to Old Trafford after their sensational 7-5 win over Reading in the Capital One Cup, and Wenger revealed that they will have to continue to make do without key players Wojciech Szczesny, Kieran Gibbs, Abou Diaby and Gervinho.
He added: "For the belief of the team it is vital we do well on Saturday. Last year's result was down to special circumstances. We have had it behind us for a long time.
"Reading was an irrational game. It concerns me a little bit. When you are 4-0 down after 36 minutes you cannot say it is alright. Some of the players still have heavy legs. [There will be] no Wojciech [Szczesny], no Gibbs, no Diaby as well. Gervinho is out for three weeks.
"I will see how [Walcott] recovers, I don't know if he will play."