With the Knicks in the hunt for a playoff spot, Madison Square Garden chairman James Dolan went back on his vow to wait until after the season to make his decision, saying that Thomas would return as coach and team president.

Thomas added the coaching duties to his other role in June after Dolan fired Larry Brown following one season. But along with the job came the ultimatum, though Dolan never publicly said what the Knicks needed to do this season to show that progress.

But with New York (29-34) already six wins better than last season and currently eighth in the Eastern Conference, Dolan said the improvement under Thomas ''needs to be recognized now and not wait.''

''I believe we have clearly seen significant and evident progress,'' Dolan said.

Dolan's announcement comes well ahead of schedule. When he met with the team's beat writers in December, he stressed that he wouldn't make a decision until after the season. However, the Knicks were 8-15 at the time and coming off a dismal home loss to Boston a night earlier in which they trailed by 30 points.

Things quickly got worse for Thomas, as the Knicks lost twice more that week _ the second coming in the brawl with Denver that embarrassed the organization _ to fall to a season-worst eight games under .500.

Dolan has since been impressed by a turnaround that has the Knicks on pace to make the playoffs after a two-year absence. They entered Monday with a half-game lead over Orlando for the final spot in the East.

More than the record, Dolan praised Thomas for getting the team to play together and for the improvement in the Knicks' young players. Second-year forward David Lee has become one of the NBA's best sixth men, and Eddy Curry has turned into one of the top centers in the East.

''I think every player has done well under Isiah,'' Dolan said. ''I think we have a great future.''

Thomas said Dolan told him of his decision Sunday night. Neither he nor Dolan would give any details of the deal, or when the old one was set to run out. They did say Thomas would stay on in both positions.

''I feel good that the uncertainty about my professional situation is cleared up,'' Thomas said after practice. ''But again the most important thing is that we keep our team moving forward and we stay focused and continue to try to get into the playoffs.''

Dolan said there was a ''crisis at the end of last season,'' referring to the poor relationship between Brown and many of the players. That contributed to New York's 23-59 record, which tied for the most losses in franchise history.

But the players have rallied behind Thomas, with Dolan pointing to the last 10 days, when the Knicks have had to play through injuries to Jamal Crawford and Lee, two of their top players.