Phil Jackson, in good health and better spirits, has decided to stay in Los Angeles and coach the Lakers for three more years, several sources told the Daily News on Thursday.
Jackson, who has one year left on his contract, recently informed owner Jerry Buss that he is interested in a two-year extension. Buss agreed in principle, according to three team sources.

Other contract terms have not been discussed, and in all likelihood, a deal will not be completed until late in the summer. Jackson is preparing to leave for his offseason retreat in Montana, and Buss is vacationing in Europe until late August.

The agreement in all likelihood means the Lakers' key people -- Jackson, Shaquille O'Neal and Kobe Bryant -- will remain together to pursue more National Basketball Association titles. Their string of three consecutive championships ended this year and Jackson needs one more title to set an NBA record.

Jackson, who will turn 58 in September, just completed the most physically trying season of his illustrious NBA career. He battled kidney stones at midseason and was hospitalized with a severe artery blockage in early May.

The heart problems had gone undetected, but Jackson had felt the effects for months. Fatigued and stressed, sometimes lacking the energy to get on the court during practice, he considered retiring.