Croatia's captain Luka Modric, the star midfielder who helped power the team to its first ever appearance in a World Cup final, had earlier urged Dalic to stay on to lead the team to Euro 2020
Zlatko Dalic, who led Croatia to the World Cup final last month, signalled on Thursday that he would stay on as coach, smoothing away doubts that emerged after his return from Russia.
Dalic had complained that he lacked the full support of the Croatia's Football Federation (HNS), saying he had to "think carefully" about his future.
But a meeting with HNS president Davor Suker appeared to clear the air.
"I consider that we solved all of the issues and I'm looking forward to new challenges," Dalic was quoted as saying in an HNS statement on Thursday after the meeting.
Suker added: "I am glad that we talked openly about things that could be better in the future and that we will go together toward new victories."
A formal signing of Dalic's contract is expected at the next meeting of HNS executive committee, the statement said.
Croatian press celebrated the announcement, with Sportske Novosti, a web portal, proclaiming: "The most important deal of Croatian football has been reached, Dalic to stay as coach."
Croatia's captain Luka Modric, the star midfielder who helped power the team to its first ever appearance in a World Cup final, had earlier urged Dalic to stay on to lead the team to Euro 2020.
Zlatko Dalic gets a hero's welcome in his home town pic.twitter.com/apFPTTbp0b— B/R Football (@brfootball) July 25, 2018
Although Croatia lost 4-2 to France in the World Cup final, their progress was celebrated with euphoria in a small country fiercely proud of its football team.
Hundreds of thousands of people swarmed Zagreb's streets to welcome the players home on July 16.
Dalic took over in October, three matches before the end of qualifications for the World Cup 2018. He had only seven matches with the team before the start of the tournament in Russia.
In recent days Dalic's name had appeared among possible successors of Shin Tae-yong to lead the South Korean side.