MADRID - FERNANDO Alonso has returned to Renault in a deal that will make him the highest-paid Formula One driver.

The two-time world champion is going to sign a three-year deal worth &pound70 million (S$206 million), reported The Times.

Retired world champion Michael Schumacher was the highest-paid driver on a US$40 million (S$57 million) annual salary.

Alonso's deal works out to approximately US$48 million a year.

Yet, despite the massive deal, his contract also has a get-out clause at the end of one year.

He had hoped to be recruited by Ferrari in 2009, but that is an increasingly dim and distant hope after Kimi Raikkonen's determined drive to the world title last season.

Alonso has been linked with his former employers since he was released from his three-year contract with McLaren last month.

A move to the French team gained momentum last Friday when the FIA, motorsports' governing body, decided against penalising Renault for possessing confidential information about rival team McLaren.

He is likely to be partnered by rookie Nelson Piquet Jr, the 22-year-old son of Brazil's three-time world champion.

Alonso has received assurances that he will be granted outright No 1 status on his return to the French manufacturer.

McLaren's policy of equality between him and Lewis Hamilton was the source of bitter infighting last season, reported The Daily Mail.

The 26-year-old Spaniard finished third in this year's drivers' standings with 109 points, after a turbulent season with the British team that included rocky relations with rookie driving partner Hamilton.

His relationship with McLaren became untenable after his role in the spy scandal, which cost McLaren US$100 million (US$147 million) and all of their constructors' championship points.

He had provided the FIA with e-mail evidence that McLaren were in possession of information belonging to Ferrari.

Alonso made his F1 debut with Renault in 2001, going on to become F1's youngest world champion with the first of his two titles in 2005.

In 105 races entered, the Oviedo native has won 15 races and finished on the podium 49 times.

With Alonso's future resolved, the rest of the driver market can finally slot into place.

It leaves last year's Renault drivers Heikki Kovalainen and Giancarlo Fisichella looking for a seat, possibly at Toyota, who have booted out Ralf Schumacher.

Kovalainen has also been touted as Hamilton's next teammate.

He is the preferred choice of the Hamilton camp, and is seen as a good team player who would not cause undue disturbance in the way the temperamental Alonso did.

His hopes of securing the dream move have been boosted by the news that Nico Rosberg, McLaren's top target, has signed a contract extension at Williams.

If Kovalainen is unavailable, McLaren may well turn to their test driver of five years, Pedro de la Rosa.

De la Rosa, who has driven in 72 Grands Prix, impressed the team in the 2006 season when he was promoted after Juan Pablo Montoya's contract was hastily cancelled by mutual consent.