It has been reported that Hughes, along with his backroom team of Eddie Niedzwiecki and Mark Bowen, becomes a free agent on June 1, potentially leaving the club with a fight to retain their manager.
The former Wales coach has been linked with a move to Chelsea should Carlo Ancelotti lose his job, but he reiterated his commitment to Fulham. "I'm very happy at Craven Cottage and am looking forward enormously to building on what we have achieved this season," he said in a statement released on the club's official website, www.fulhamfc.com.
"I enjoy a good relationship with the owner, management, players and supporters of Fulham Football Club and look forward to continuing that relationship next season."
Hughes has enjoyed an impressive first season at Craven Cottage with the club sat 10th in the Barclays Premier League table with two games remaining.
Fulham's precarious position around the Christmas period, when they faced the prospect of relegation, fuelled speculation that his departure was imminent.
But the 47-year-old has responded by steering the club into mid-table, enhancing his own reputation in the process.