Friedel's current deal runs out this summer, but the 39-year-old American has shown no signs of his form diminishing.
Villa manager Gerard Houllier had always indicated he would talk to Friedel about a new deal before the season ended, and Friedel's agent, Tony McGill, said: "We are in talks over a new contract. Brad is very happy at Villa. If Brad was not happy, he would not be talking over a new contract."
He added: "I have spoken with (Villa) chief executive Paul Faulkner and talks are going very well indeed."
Friedel, who last week rubbished claims of there being a player mutiny at Villa, spent seven years at Blackburn before moving to the Midlands club in the summer of 2008.
He was initially at Liverpool during the early part of Houllier's reign at Anfield in the late 1990s.
Villa's other senior keeper, Andy Marshall, also recently signed a new 12-month contract.
Source: PA
Source: PA