Wallace had been weighing up approaches from Montpellier, Leeds and Worcester but has instead chosen to stay with the struggling Celtic League outfit until 2010.

The 28-year-old, who made his Ulster debut in 2001, revealed the recent appointment of former Scotland boss Matt Williams as head coach was instrumental in his decision.

He said: “The future looks exciting at Ulster with Matt now in place.

“The fact that Matt Williams was very keen to keep me was a big sway in me staying.

“I feel that there is unfinished business here at Ulster because we have not progressed in the Heineken Cup over the last few years.

“That is something that I’ve always wanted to do and is something we’re capable of achieving in the next couple of years.”

Wallace, who can play in the centres or at fly-half, has won six caps and has been a regular feature on Ireland’s bench since November 2006.

He made just one substitute appearance during the World Cup, with Ronan O’Gara having an unbreakable stranglehold on the number 10 jersey.

His decision to stay at Ulster has stemmed the flow of stars leaving the province, with Neil Best, Tommy Bowe, Roger Wilson and Justin Harrison among the departures.