"Mr Rehhagel will stay with the Greek football federation for the next two years," said Vassilis Gagatsis, president of the Hellenic Football Federation (EPO).
German Rehhagel, affectionately known as King Otto, has been touted as a leading candidate to succeed Rudi Voeller as Germany coach after guiding Greece to a staggering success in Euro 2004.
Greece, who started the tournament as 80-1 outsiders, stunned the soccer world on Sunday by defeating hosts Portugal 1-0 in the final in Lisbon, a feat seen by many as the country's greatest sporting achievement.
"That Germany may want him is totally logical. When I asked him after the (Euro) championships to extend it until 2008 he said to me that he didn't want to end up in a wheelchair (as a result of continuing to coach into old age)," Gagatsis said.
"It's self-evident he will stay in Greece. Otto Rehhagel is one of us now...a man who believed in us (from the start), a man who believed in Greece."
Gagatsis said the 65-year-old Rehhagel had renewed his contract two weeks before Euro 2004.
"Mr Rehhagel has had other offers in the past and he has honoured his contract. There is no problem," Gagatsis added.
Rehhagel was given the key to the city by Athens mayor Dora Bakoyianni on Monday and made an honorary citizen of Athens during a huge homecoming ceremony.
