The striker's current contract expires in 2018 but the Foxes are already prepared to reward the England star with a new deal which will tie him to the King Power Stadium until 2019
No deal is imminent but talks are progressing well with the 29-year-old striker, who has scored 16 goals this term, ahead of Tuesday's visit of Liverpool
Vardy set a new Premier League record when he netted in 11 straight games before Christmas and has helped the Foxes to the top of the standings.
The 29-year-old signed his last contract in 2014 but - after boss Claudio Ranieri insisted earlier this season they would wait until the end of the campaign to extend the forward's deal - Leicester have now moved to end speculation on his future
Chelsea, Manchester United and Manchester City have all been credited with an interest although Press Association Sport understands City are not keen on the forward, despite admiring his achievements this season.
Vardy joined City from Fleetwood for £1m in 2012 and has since broken into the England squad, earning four caps, and is set to be included in Roy Hodgson's squad for Euro 2016 this summer
He has scored 42 goals in 131 appearances for the Foxes
Source : PA
Source: PA