Rafael Benitez this week rejected an approach from Real Madrid, the club where he started his playing and coaching careers, to pledge his future to Liverpool. The Spaniard agreed in principle on a four-year contract at Anfield and has already turned his attention to shattering Chelsea's domination of the Premiership.

Real's long-standing interest in the 45-year-old led their new president, Fernando Martin, to inquire about Benitez returning to the Bernabeu. That approach was made to the Spaniard's agent, Manuel Garcia Quilon, as Martin stepped up his search for a successor to Wanderley Luxemburgo, sacked in December. But it provoked Benitez immediately to reaffirm his commitment to Liverpool.

The manager's proposed contract at Anfield is worth about £10 million and will extend his stay to 2010, a year beyond his current deal. Liverpool are confident they will attract investment before the summer to give him the clout to compete for the Premiership title.

"As a manager you must be proud a big club like Real Madrid talk about you and your future," said Benitez, who has also attracted interest from Internazionale. "But I am happy here and if we continue progressing I think I will be here for a long time.

"I've spoken with (the chief executive) Rick Parry, the chairman (David Moores) and the board and they've told me they have the same idea as me. They want to progress, to win trophies and keep the club going forward. For me, that is enough.

"I never thumped my fist with demands for more money to spend. If I'm happy here, I don't need to hear or read things about my future. My future is here."

That much has been welcomed by the board. "What Rafa wants to do is win trophies and be sure that the club matches his ambition, which we do," said Parry.

Benitez even joked that, should the opportunity arise, he would be happy to stay at Liverpool "for 20 years", though it seems clear he would like to manage Real at some stage. That prospect would be enhanced should he claim a Premiership title.

However, the fractious relationship he endured with the sporting director Jesus Garcia Pitarch at his previous club, Valencia, born of disagreements over transfer policy, has inflicted a scar which will be to Liverpool's long-term benefit.

"You can work really comfortably in England because you can decide for yourself which players to sign," he said. "As a manager it's a good situation to be in, and in England it is easier than in Spain to coach and manage. Problems arise there when you tell the technical manager you want one player but he does not agree. Here the responsibility is mine.

"But if I want to stay here for a long time it means I have confidence that we can challenge Chelsea. We will have a better team next season. We are going the right way. Can we win the Premiership with the squad we assemble? It depends on other sides, but we would have more possibilities. In football, even with Chelsea's money, anything is possible."