updated 7:46 p.m. ET Jan. 6, 2006

IRVING, Texas - Bill Parcells is coming back for another season with the Dallas Cowboys. Maybe even two.

The team announced Friday that Parcells agreed to a new contract through the 2007 season.

“I feel very fortunate to have the opportunity to continue what we have started here,” Parcells said in a news release. “The Cowboys organization has been the fairest of fair to me, and hopefully I can repay them with an improved performance.”

Parcells, 64, had a year left on the four-year, $17 million contract he signed in January 2003. However, he left his three previous coaching jobs mid-contract and there was speculation he might do it again.

The question diminished as this week went on and Parcells continued showing up at his office every day. The announcement ends any doubt and helps turn attention to what the club will do to continue a turnaround that saw them go 9-7 after being 6-10 the previous year.

“This is about continuity and building upon the pieces we have in place as an organization and as a football team,” Cowboys owner Jerry Jones said. “We aren’t where we want to be at this point, but we’re definitely moving in the right direction and feel very good about the future.”

The Cowboys are 25-24 under Parcells, counting the postseason. Over his 18-year career, he’s 163-123-1, good for ninth on the career win list, with two Super Bowl wins.

In three years with the Cowboys, Parcells has enhanced his reputation as a rebuilder, but he still has plenty to accomplish — starting with winning a playoff game.

Terms of Parcells’ new contract were not immediately available. A team spokesman said Jones would have no further comment. Parcells, who rarely speaks to reporters in the offseason, also was unavailable. His agent, Jimmy Sexton, did not immediately return a phone call to The Associated Press.

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Despite having added a year to Parcells’ existing deal — and probably giving him a raise, too — Jones could end up in the same will-he-stay-or-will-he-go dilemma after the upcoming season.

Coaches usually work with an extra season on their contracts, partly as leverage with players who might view them as headed out. So even with the extension, Jones can only count on getting 2006 out of Parcells.

“As I have said for the past three years, I am encouraged by Bill’s enthusiasm and determination, and that hasn’t changed in any way,” Jones said. “From a personal perspective I have enjoyed every aspect of our working relationship, and I am optimistic about the organization’s future.”

The makeup of Parcells’ staff remains in doubt. Sean Payton, the passing game coordinator and assistant head coach, is a candidate for the head coaching jobs in Green Bay and New Orleans, and defensive coordinator Mike Zimmer is up for the St. Louis job.

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As for the roster, Dallas will have to decide about whether to keep several veterans who are due roster bonuses. The Cowboys likely will be on the hunt for several starters in free agency, and they have the 18th pick in the draft.

Parcells arrived in Dallas three years ago this week, taking over a club coming off three straight five-win seasons.

He won 10 games and made the playoffs right away, but lost to Carolina in a wild-card game. After the worst second season of any of his coaching stops, he rededicated himself for ’05, restructuring the team more to his liking, and saw immediate results.

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