The 23-year-old, who has been compared to La Liga stars Cristiano Ronaldo and Lionel Messi, has been heavily linked with a move to Real Madrid, who are reportedly prepared to offer £70m for the Wales international.
Despite being tipped to leave White Hart Lane, Waddle believes that Bale deserves to give Spurs another season.
"I'd like to see Tottenham nail him down to a new contract at the going rate, whatever that is," Waddle wrote in his Daily Mail column.
"A year playing like this in the Champions League and he will be in the £70m bracket. Big clubs will offer big money. But maybe it's time for him to give Tottenham a bit back. The club are growing, with talented players and a good manager. With one or two acquisitions Spurs can challenge for the title next year."
Bale has scored 12 goals in his last 13 matches for the North London club.