By Alan Baldwin

SILVERSTONE, England (Reuters) - Former world champion Kimi Raikkonen will stay at Ferrari next season, the Italian Formula One team announced on Friday.

"The driver line-up for the 2017 racing season will still consist of the Finnish driver and Sebastian Vettel," a Ferrari statement said.

Raikkonen, who won his title with Ferrari in 2007, is currently level on points with team mate Vettel ahead of this weekend's British Grand Prix, behind Lewis Hamilton and leader Nico Rosberg.

The Finn, who will be 37 in October, is the oldest driver on the starting grid but also one of the most popular among fans who admire his no-nonsense attitude and focus on racing.

Ferrari have yet to win this season but are the closest team to champions Mercedes and hoping to fight for the title next season when the sport undergoes an overhaul of the technical rules.

Vettel, a four times world champion with Red Bull before joining Ferrari last year, gets on well with Raikkonen and had made clear he wanted the partnership to continue.

"It's easy to work with him because you don't need to worry about any tricks or games or whatever that are potentially a distraction to getting the job done," the German told reporters last month.

The Ferrari seat is one of the most sought after, even if not currently the most competitive, with the team the most glamorous and successful in Formula One history.

Ferrari had seemed to be running out of top level alternatives to the 'Iceman', however, with triple world champion Lewis Hamilton contracted to Mercedes until 2018 and team mate Nico Rosberg making clear he wants to stay.

Red Bull recently confirmed they had Australian Daniel Ricciardo, who has Italian citizenship and is a known Ferrari target, and Dutch teenager Max Verstappen locked in on long-term contracts.

Raikkonen's extension also rules out any immediate move for Frenchman Romain Grosjean, at Haas, and Mexican Sergio Perez at Force India.

The pair had been linked to Maranello on the paddock grapevine, with Perez a former Ferrari academy driver.

Ferrari's move should speed up Rosberg's talks with Mercedes now that there are no more attractive possibilities remaining.

The focus of the driver market will now switch to McLaren's 2009 champion Jenson Button, who is out of contract at the end of the year and likely to be replaced by Belgian Stoffel Vandoorne.

Button has also been linked to a return to Williams.

(Editing by Keith Weir/Amlan Chakraborty)