Nico Rosberg
German Nico Rosberg has signed a two-year contract with Mercedes.Reuters

Nico Rosberg has signed a two-year deal with Mercedes and will remain with the Brackley-based outfit till the end of the 2016 Formula 1 season, according to reports.

Rosberg's contract was set to expire at the end of this year but with a new deal in place, the German will drive alongside Lewis Hamilton for the German manufacturer.

"We have long-term relationships with both our drivers," a Mercedes spokesperson was quoted by BBC.

Hamilton has been on a three-year contract with the Silver Arrows and with Rosberg signing a new contract, the duo will drive together for Mercedes for atleast one more season.

28-year-old Rosberg is currently second, behind Hamilton, in the drivers' championship with 97 points. He won the season opener in Melbourne and finished second behind his teammate in the other four races.

Former F1 driver David Coulthard said Rosberg has provided Mercedes team the stability that it required in the past two seasons. He added that the German is capable of challenging his teammate and will take the battle till the end.

The former Red Bull driver insisted that though Rosberg has challenged Hamilton in the entire season so far, the Brit is still the number one driver for the German manufacturer.

"The reality is you can only have one of your drivers standing on the top spot of the podium," Coulthard said. "Lewis Hamilton has been brought in as a former world champion, as the one that they would have expected to really be leading the charge for another championship."

Rosberg has been with Mercedes since the team's return to the Formula 1 grid in 2010. The German has performed consistently in past four seasons and registered a memorable win in the Monaco Grand Prix last season.

"No disrespect to Nico but we've seen Lewis and Fernando go head to head before at McLaren and it didn't work," Coulthard said. "We've seen Ayrton Senna and Alain Prost within a team together as well and that didn't work. Ideally you have two number ones but there's always going to be one of them that's slightly stronger."

Chairman of Mercedes-Benz Cars Dieter Zetsche, during his visit to a Mercedes car factory, had said that Ferrari's Fernando Alonso is probably the best driver in F1 right now. Zetsche's remarks had fuelled speculations that Mercedes are in pursuit of Alonso to join Hamilton for  next season.

Zetsche later clarified that the team is happy with the current driving pair and is not looking to sign Alonso. Alonso is currently having a strained period with Ferrari, as the Italian outfit has failed to make a championship winning car for the Spaniard.