Italian Valentino Rossi has extended his contract with Yamaha to the end of 2008, the MotoGP team said on Thursday.

Rossi, dethroned as champion by Honda's American Nicky Hayden last year after five 500cc and MotoGP titles in a row, joined the Japanese manufacturer in 2004.

"Now I can just concentrate on racing this season," the 27-year-old said in a statement.

"I think that last year, when we fought back from what seemed an impossible situation to come so close to taking the title, showed what a fantastic team we are and this is why I want to stay.

"I have great faith in Yamaha and I am very excited about my future and the future of the 800cc bike with them. We are ready to challenge with the new 800cc and now this agreement gives us the chance to launch this challenge for the next two years."

The season starts in Qatar on March 10, with the top category machines reduced from 990cc to 800.

Rossi was courted by Ferrari and Formula One, before announcing last year that he was staying on two wheels. However, he has talked recently about a possible switch to the world rally championship.

"Yes, this could be my future after motorcycling," he said in November after competing in the Rally of New Zealand.

The Italian, third in motorcycling's all-time Grand Prix winners list, will take part in the second test of the year at Malaysia's Sepang circuit next week.