A Pepsi spokesman denied reports that the company planned to drop the singer because his popularity with teenagers had "already started to wane".

He has exceeded our expectations and we are delighted with his success

Pepsi spokesman

He said the singer, who signed with the firm in March, had always had a year's contract.

But the Daily Mail reported that seven months into the contract Pepsi executives had decided the six-figure deal would not be renewed when it ends next year.

Stars line-up

The spokesman told BBC News Online: "He has not been axed.

"Gareth was always on a one-year contract.

"He has exceeded our expectations and we are delighted with his success.

"We wish him all the best in the future."

Robbie Williams also had a year's contract

He said that Gates was one of a long line of stars signed by the drinks company for a year's contract including Robbie Williams, The Corrs, Boyzone, Five and Janet Jackson.

Gareth signed with Pepsi just a month after he came runner-up in ITV1's talent show Pop Idol.

Despite coming second, he has enjoyed chart success with his singles - a cover version of Unchained Melody and Anyone of Us (Stupid Mistake) - both going to number one.

And he is currently number one with Pop Idol winner Will Young with their cover version of the Beatles' The Long and Winding Road.

Gates's album is due to be released within the next few weeks.

Meanwhile the search is already on to find the next big talent in ITV1's PopStars: The Rivals.