Sam Allardyce will still be manager of West Ham next season but the club's board has demanded more attacking football and a top-10 finish in the league.
Despite a respectable 13th in the Premier League, some reports had suggested the 59-year-old was facing the axe after three years in charge.
He was summoned to a meeting at West Ham co-owner David Sullivan's house in Essex last week where he put forward his case to keep hold of the reins next season.
Allardyce clearly impressed the board with his vision and a statement on the club's website revealed the manager had agreed to recruit a new attacking coach, along with an overhaul of the scouting and recruitment operation, although he faces demands for "more entertainment" and a top-10 place in the top flight.
On the back of "constructive" and "lengthy and detailed" talks between Allardyce and the board, the club statement on Tuesday afternoon read: "The club's direction, values and philosophy and a positive way forward for next season has been agreed.
"After listening to feedback from supporters, the Board have insisted on improvements to the set-up of the playing and backroom staff to ensure the team provides more entertainment next season.
"The board will once again be investing considerable funds into the Club this summer. The club have made clear that they want to see progression on the pitch and at least a top-ten finish as a result."
Allardyce took charge of the Hammers in 2011 and immediately steered them back to the top-flight, but some fans have never warmed to his playing style and jeered after their home win over 10-man Hull City in March.
After Tuesday's announcement, the former Bolton manager said: "I look forward to taking the club forward and improving the squad for next season to try and achieve the plans we have set out in our very productive meeting last week."
West Ham United Joint-Chairmen David Sullivan and David Gold added: "We have a very clear vision of how we want West Ham United to operate under our joint ownership. Although not everybody understands the West Ham Way, we do and we respect it as we have been supporters all our lives.
"We believe this is about a philosophy that is not just about the style of play, but the whole ethos that surrounds the club. We have mapped out a way forward with (Sam) that will ensure our much-deserving fans have more to cheer about next season.
"We should also stress, though, that while improvements do need to be made, Sam deserves credit for the job he has done thus far after securing promotion in his first year and two respectable Premier League finishes in the two years thereafter.
"The truly historic opportunity of a move to the Olympic Stadium in 2016 forms a major part of our five-year strategy to take this club forward and, while we have a duty to make sure we stay in the Premier League, we also want to make sure the performances on the pitch will befit a team playing in such a world-renowned stadium.
"We are absolutely committed to taking West Ham United to new heights and we want to see the club continue on an upward trajectory next season. The 2014/15 campaign is crucial to our future and we are confident that Sam has the passion, experience and determination to make sure it is a success."
