The 26-year-old was constantly linked with a move to London rivals Chelsea this summer and the player reportedly revealed his desire to make the move.
Spurs managed to keep hold of the Croatian international, who is now featuring again on a regular basis, scoring a long-range effort in the 4-0 victory over Liverpool last weekend.
Current top earners at White Hart Lane are William Gallas and Rafael van der Vaart, who reportedly earn £75,000-a-week, and the new deal could see Modric become the highest paid player at the club.
Speaking earlier this week, Spurs boss Harry Redknapp said: "If he is worth £40m then life tells you that you have to be paid accordingly.
"You have to look after the boy and I am sure we will do that. Hopefully, his future is here.
"This is a big club, a good club, I am sure the chairman will sit down and talk to him. We have got to convince him that his future is here and make it right for the boy, which is only fair and I am sure he will."
Spurs next host Shamrock Rovers in the Europa League on Thursday.