Galabank chairman Philip Jones confirmed the 40-year-old is finalising a two-year extension to his contract.
Murphy – who has been at the helm since 2017 – has already started building for next season, getting current players signed up and talking to others outwith the club.
Mr Jones said: “We’re in discussions about extending his contract. We understand it’s been a hard, fractured year. Peter has worked extremely hard, but we’ve struggled with a mountain of injuries this season.
“This is time to show a bit of loyalty and trust to Peter. We’re trying to look after him. If you look at the season we’ve had a mountain of injuries and we have been playing well but not getting the results. We played well against Queen’s Park during the week, they had to change their formation to cope with us.
“Before covid hit last season, we were in the mix for the promotion play-offs. We’ve had two successful seasons and I accept we’re struggling at the moment, but we have a six-point cushion over Brechin.”
Annan face a massive match against League Two basement boys Brechin City at Galabank on Saturday, with an earlier kick-off of 12 pm due to the funeral of Prince Philip.
If Murphy’s men can pick up the victory, they will edge nine points clear of the Glebe Park side.