Shane Williams is expected to retire from professional rugby at the end of the season.
Williams called time on his illustrious international career in December but the winger had been expected to continue playing with the Ospreys until the end of the 2012-13 season.
Despite being offered a year extension the winger is believed to be on the verge of announcing his decision to retire from all rugby.
Speaking after his final Wales appearance, the winger admitted he was not sure how long he would continue playing for the Ospreys.
"I've got this season and next season left in my playing contract. I've already been offered an extension to stay another year, but I think realistically two years will be where I want to be," he said.
"You can never say never, but I'm sure in two years' time that I'd like to be doing other things. And I have spoken to Mike and Andrew about remaining with the Ospreys for as long as I possibly can - for life if I could."
The 34-year-old scored 58 tries in 87 games for Wales before he brought the curtain down on his international career in the 24-18 defeat to Australia.