The Killybegs man, 22, has a signed new four and a half year deal with the club.
The official Everton website is reporting that both players have penned four-and-a-half year deals, keeping them at the club until 2015.
It is believed Coleman’s new deal could net him up to €35,000 a week.
Coleman has been one of this season’s success stories, becoming a regular in the Toffees’ midfield.
He originally joined as a full-back from Sligo Rovers, but manager David Moyes enlisted his pace and skill going forward to solve a problem on the right side of midfield – and Coleman has been a revelation, scoring five goals already this season.
He had only signed a new contract last May, but his impressive progress this season has prompted Chairman Bill Kenwright to offer him a longer term deal on vastly improved terms.
The defender has scored five goals already in 22 appearances this campaign, earning rave reviews for his displays as a make-shift midfielder and winning comparisons with highly rated Gareth Bale, of Spurs, who was also converted from a defensive to a midfield role.
The better contract is believed to be designed to protect the club’s asset and ward off a list of potential suitors.