It was looking increasingly likely that the 32-year-old England defender would leave Stamford Bridge this summer as talks stalled on a new deal.
But it appears Cole has now committed his future to Chelsea for at least another season by agreeing on terms to remain with the club until June 2014.
Cole is approaching 300 appearances for the Blues since signing from Arsenal in 2006, and his signature will be met with approval from large sections of the Stamford Bridge crowd who were keen to see both him and Frank Lampard remain with the club.
At the beginning of the year, Lampard's agent, Steve Kutner, had suggested that "in no circumstances" would the midfielder be offered a new deal (via The Guardian):
Chelsea executives told Frank in Japan during the Club World Cup, then again reconfirmed with me after the Everton victory, that in no circumstances will he be offered a new contract to stay at the club after the end of this season.
Prior to the news of Cole's new deal, it seemed both Chelsea stalwarts would be playing their football elsewhere next season, so it remains to be seen whether Cole's contract will open the door for Lampard to be offered similar terms.