The deal was announced at a news conference at Stamford Bridge on Friday afternoon.

Casiraghi will link up with his friend Chelsea manager Gianluca Vialli who, ironically, ousted him from the Juventus line up, forcing him to leave for Lazio in 1993.

The 29-year-old has been a stalwart of the Italian national side but has not been picked to play in the World Cup.

Vialli will now field a new-look strike force next season unless there are any last-minute hitches, with Casiraghi lining up alongside former Rangers star Brian Laudrup.

Chelsea have the money to spend after a season in which they won the European Cup Winners' Cup and the Coca-Cola Cup.

Managing director Colin Hutchinson said: "It is great news. I'm sure Chelsea fans will be happy to hear we're continuing to bring quality players to the club."

Lazio, meanwhile, want Chelsea's Roberto Di Matteo. President Sergio Cragnotti said: "We will have another meeting with Chelsea because we are still interested in Di Matteo. It appears to be very tough but we are going to continue."