McLeish has a season left on his current deal, but has managed to impress the club owners this season.
“I spent about two hours on Monday with Alex, together with the chief executive,” Birmingham vice-chairman Peter Pannu told a fans’ forum. “We have gone through a contract.
“Carson acknowledges his contribution thus far.
“We have indicated to him, in no uncertain terms, that we want to have a future with him at the club. We told him that we want him to stay.
“Although his contract does not expire until 18 months from now, we have started negotiations.
“We have indicated to Alex the sort of terms we will be offering to him and he received them very, very well.
“He will be meeting Carson personally when Carson flies in at the end of this week.”