Lundqvist, a restricted free agent scheduled for an arbitration hearing on July 24, will earn $4.25 million next season. He made $817,000 last season.

The two-time Vezina Trophy finalist will be in line for a long-term contract after next Jan. 1 that will impact the 2008-09 cap instead of this season.

If New York signs Lundqvist to another one-year deal in 2008, they run the risk of losing him to unrestricted free agency in the summer of 2009.

It was the second key re-signing by the Rangers in two days after Brendan Shanahan agreed to a one-year contract Tuesday to return to New York for a second season. That leaves forwards Sean Avery and Marcel Hossa, both slated for arbitration, as the Rangers' last remaining restricted free agents.

Following the free-agent signings of centers Chris Drury and Scott Gomez, New York has very little room left under the $50.3 million salary cap for next season. Shanahan signed for $2.5 million in base salary, far below the $4 million he earned last season, but can surpass that amount with regular-season and playoff bonuses that could add another $2.8 million to the deal.

The 25-year-old Lundqvist went 37-22-8 with a 2.34 goals-against average in 70 games last season — his second in the NHL. The 37 wins were the second-most in a single season in Rangers history.

The goalie, who led Sweden to the gold medal at the 2006 Turin Olympics, tied for sixth in the league with five shutouts. His 67 wins over his first two seasons are the most in Rangers history.

Lundqvist put up a 1.85 GAA with a .931 save percentage in his final 44 regular-season games last season. He allowed two goals or fewer 33 times in that span.

In the playoffs, Lundqvist was 6-4 — including a four-game sweep of Atlanta in the first round — with a 2.07 GAA and .924 save percentage.