Sir Alex Ferguson has confirmed veteran midfielder Paul Scholes has signed a one-year contract extension with Manchester United .

After abandoning his retirement in January, there had been some speculation that the 37-year-old was deliberating whether to extend his career by an additional season.

However, speaking at Monday evening's Manchester United Player of the Year dinner, Ferguson told MUTV: "It has been done. He is staying."

Ferguson does believe that will be Scholes' last season in a United shirt and will be wary of the midfielder being selected in Roy Hodgson's Euro 2012 squad, as has been suggested.

However, the United boss is convinced the midfielder can have a similar impact next season after he almost managed to guide the Red Devils to the title following his comeback.

"I am delighted," said Ferguson. "He knew he had made a mistake. He now realizes if he plays 25 or 30 games next season, they will be of real quality.

"I think this will be Paul's last season. We know him very well. We have had him since he was a kid. We know how to use him."