The clubs longest serving player was in the last year of his current deal and was eager to extend his stay with the blues.
At the end of George Burley's reign, 'Bam-Bam' as he is affectionately known by fans and players alike, was frozen out and on the verge of leaving the club.
However, under Joe Royle, the 28 year-old has been given a new lease of life after being moved from a striker to a central defender.
Naylor now believes this new role has lead to him playing the best football of his career and he is currently enjoying his testimonial year, after ten years service to the club.