Xavi Hernandez will stay at Barcelona at least until June 30, 2015, AS reported on Tuesday.
The midfielder, who was close to a free transfer to Qatari club Al Arabi and who was in advanced talks with fledgling Major League Soccer club NYC FC, is expected to return to Barcelona training on July 24.
According to media reports in Spain, the 34-year-old spoke with new coach Luis Enrique about his new role, in which he will no longer be an automatic starter.
Club president Josep Maria Bartomeu had previously said that Xavi had "earned the right to decide" his future and would have been permitted to leave the club on a free transfer. The Barcelona product joined the first team for the 1998-99 season and has a contract through 2016.
Barcelona defender Marc Bartra said that a Xavi exit would leave a huge hole for the Catalan club.
Xavi's exit would have made for the third Barcelona vice-captain to quit the club in the last season, with Victor Valdes seeing out his contract and Carles Puyol retiring with knee problems.
"Those three players are leaders, three great players that, if Xavi's departure is confirmed, will leave a huge hole in the dressing room," Bartra said at a news conference.
"Personally Xavi has helped me a lot, and so it would be very sad news for me if he leaves, but we will respect his decision, he has earned everyone's respect."