The London club are close to reaching an agreement with the England international on an improved deal following fruitful negotiations over the festive period.
Both parties are confident that Walcott will shortly put pen to paper on a deal that will run until 2017.
Walcott, whose current contract expires in the summer, has been encouraged that Arsene Wenger has lived up to his promise of giving him opportunities to play in his favourite centre-forward role.
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As revealed by Goal.com in November, Arsenal and Walcott’s camp have also shifted their salary stances in order to reach an agreement.
The 23-year-old rejected a £75,000-a-week five-year contract last August but the new deal is likely to be worth around £90,000-a-week plus top-up bonuses and a multi-million pound signing-on fee.
The London giants are confident that the long-running saga will finally come to an end this month and that the player will commit the prime years of his career to the club.
Although a resolution is still to be reached, the tone of informal discussions has given encouragement that Walcott is not set to follow the likes of Robin van Persie, Alex Song, Samir Nasri and Cesc Fabregas out of the Emirates Stadium exit door.
Speaking at his weekly press briefing on Thursday morning ahead of Arsenal’s FA Cup tie at Swansea City this weekend, Wenger said: “We are talking. It is very difficult to be predictable in these kinds of situations but our desire is there to do it as quickly as possible.”
Walcott has been in contract negotiations with Arsenal since the back end of last season and had been hoping for a significant upgrade on his current £60,000-a-week deal.
Arsenal would lose Walcott for nothing in the summer if he does not agree new terms, while he is also free to sign a pre-contract with a foreign club this month.
Chelsea, Manchester United and Liverpool are among the leading clubs who have expressed an interest in signing the forward.
Walcott has started only 12 of Arsenal’s 29 games this season after being regularly overlooked by Wenger in the first three months of the campaign but he leads the scoring charts with 14 goals in all competitions.
Crucially, the Arsenal manager has shown faith in Walcott’s ability to lead the forward line, selecting him to start the Gunners’ last four league matches up front, ahead of Olivier Giroud and Gervinho. The England international has responded with four goals, including a hat-trick against Newcastle United.Follow Wayne Veysey on