Fulham goalkeeper Mark Schwarzer has signed a new contract to keep him at the club until 2012.
The deal is for a further two years, meaning Schwarzer will turn 40 as a Fulham player.
Australian Schwarzer, 38, who moved to Craven Cottage from Middlesbrough in 2008, was linked with Arsenal during the last transfer window.
Hughes told a press conference on Thursday: "He was obviously very flattered by the interest.
"We're delighted that he's decided to stay here and we can move forward now."
Hughes continued: "It's something we've wanted to do for quite some time.
"I just sat him down and said in black and white terms that Fulham and I need him at the club to be successful," Hughes said.
"I think Arsenal's interest has always been there but we have had long talks with Mark and told him that we want him to be here."
"He is an outstanding keeper and has been in the Premier League for many years. He understands what it's all about and we are a better team when he is playing."
"It was an opportunity and he investigated it, at he was entitled to do, but we were not in a position to let it happen. Now it has been concluded I think he is happy with the outcome and we can all move on."
Schwarzer said: "I'm delighted to have finally signed a contract extension with Fulham after a great deal of speculation surrounding my future in recent months.
"The club, manager and team have all highlighted their desire to see me stay at the Cottage and after successful negotiations I can confirm that my future is with Fulham."
"Since I joined the club in 2008 we have enjoyed a great deal of success and I believe Mark Hughes will build on this success over the forthcoming seasons and continue the club's progress. I have enjoyed two memorable years at the Club so far and I am now looking forward to many more."
In his first season with the Cottagers, Schwarzer was named the club's player of the year as then manager Roy Hodgson took Fulham to seventh, their best finish in the Premier League.
The keeper has also played for Australia 82 times, including at both the 2006 and 2010 World Cup finals.