Real Madrid striker Benzema has been linked with a £50million move to Arsenal.
The striker's current deal expires in 2019 but uncertainty over his future has arisen in recent weeks.
Real manager Zinedine Zidane is reportedly keen to bring in new forwards this summer, with Andrea Belotti on the Frenchman's wish list.
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James Rodriguez and Alvaro Morata are also facing the Bernanbeu exit door in the summer.
According to the report, Benzema will renew his contract for only the second time since he joined Real back in 2009.
He will increase his wages to £7.7million a season, roughly £147,000 a week.
Real Madrid will offer Karim Benzema a new contract in the summer
Arsenal are said to be interested in signing Benzema
Benzema is reportedly valued at £50m
With Arsenal set to miss out on the 29-year-old, manager Arsene Wenger is expected to change his transfer plans for the summer.
Should Wenger extend his stay at the Emirates at the end of the season, Arsenal have been linked with a raft of top strikers, including Torino's Belotti.
The Gunners also tried and failed to sign Alexandre Lacazette from Lyon last summer, while they were snubbed by Jamie Vardy when they triggered the Leicester frontman's release clause.