Chelsea will hold more talks with Michael Ballack this week as both parties edge closer to extending the Germany international's stay at Stamford Bridge when his contract runs out next month.

Ballack is recuperating after suffering ankle ligament damage in the FA Cup final, an injury that has ruled him out of the summer's World Cup finals. He is due back in London this week and, having accepted there is no chance of adding to his 98 caps in South Africa, will resume discussions with the Double winners over a new 12‑month deal at Chelsea.

That will disappoint the Bundesliga club Schalke, who had hoped to secure his signing under the Bosman ruling on 1 July. "Life goes on and it's necessary to move forward," said Ballack. "I think that I'll continue playing for Chelsea as, in the last few days, I keep getting calls from the club. People trying to comfort and inspire me. All of this suggests I'll stay at Chelsea. Also, the coach Carlo Ancelotti always showed confidence in me during the season."

Ballack held down a first-team place with regularity in the final few weeks of Chelsea's fine domestic season playing as a defensively-minded midfielder in the absence of the injured Michael Essien and Mikel John Obi.

The Premier League champions, who have publicly indicated they are seeking to reduce their wage bill, are confident Nicolas Anelka will sign a two-year contract extension, most likely after the World Cup finals, while the club remain at an impasse with Joe Cole's representative. The England midfielder is out of contract at Stamford Bridge at the end of next month.