Allison, who originally joined the team in 2017 and helped win four drivers' titles and five consecutive constructors' titles, returned to Mercedes in 2023 after a spell as chief technical officer.

Mercedes have slipped from their dominant position and have won just one race in the last two seasons, finishing a massive 451 points adrift of Red Bull in last season's constructors' standings.

But Allison is confident their different technical direction for the upcoming season will serve them well as they bid to return to winning ways.

"If you look at the long march of F1 history, then the stats are against us," Allison said.

"Teams do not bounce back from slipping from their previous peak in the length of time we have set ourselves, but we have nevertheless set a pretty ambitious programme.

"We have quite a lot of strength in depth here and we've made quite a lot of progress with next year's car."

Allison, who has also won drivers' and constructors' titles with Renault and Ferrari, was hailed by Mercedes team principal Toto Wolff as "the most impressive technical leader in our sport".

"I am thrilled that James has committed his long-term future to the team," Wolff said.

"His gladiator spirit, along with his knowledge, experience, and determination, make him second-to-none. His influence and impact, however, goes so much further than that."

Mercedes will unveil their 2024 challenger on February 14 and will again have British duo Lewis Hamilton and George Russell behind the wheel this season.