O'Neill, whose side are in the FA Cup semi-finals and still pushing for a place in Europe next season via the Premier League, spoke at length on the club's website and later issued a statement to clarify his position.
"In the light of ongoing and perplexing reports -- despite my efforts to bring clarity to the situation earlier today -- I would like to reiterate one or two points which, to me, are essential," O'Neill said in his statement on Thursday.
"Every summer since taking the job in 2006, I have sat down and discussed the season in general terms with my chairman, Randy Lerner, attempting to formulate plans for how we hope to improve the club year on year.
"This summer will be no different. I have a yearly rolling contract and I hope to continue to do a job, the challenges of which I enjoy immensely."
It is an unusual step for a manager to issue a statement via a club's website and the early editions of Friday's newspapers were busy speculating that the former Celtic manager might be ready to leave the club.
Earlier on Thursday, O'Neill said he had been "shocked" to learn from his media officer of Internet rumours suggesting he had walked out because of the possible sale of England winger James Milner to Manchester United at the end of the season.
"This is ludicrous. Don't get me wrong, I wouldn't think for one minute that top clubs wouldn't be interested in James because he's been splendid but you can make it up as you go along. Then if you're not immediately denying something, it grows arms and legs."
O'Neill said he had received a telephone call from American owner Lerner, who had asked him if there was anything he could do to shoot down the story.
"He was very supportive and that was pleasing. He took the time to make the call," O'Neill said.
"The point is he was surprised because we hadn't spoken since the Chelsea game and therefore he would have wanted to know if I had disappeared out of the club without letting him know anything."
Villa are trying to qualify for Europe for a third consecutive season but their hopes of a top-four spot and a chance at the Champions League are fading fast after just one win in their last five league games.
On Saturday Villa were thrashed 7-1 by Chelsea at Stamford Bridge.
‘He could have been another Thierry Henry if he’d stayed at Arsenal. It was up to him what he wanted because he was 6ft 1in, quick and unbelievable’: Ray Parlour claims Champions League winner could have enjoyed even greater success with Gunners
‘I don’t think we’ll see Marcus Rashford at Manchester United again – when you’re not seeing eye to eye with a manager, it can hinder your training, but a loan can work, it did for me’ Ex-Premier League star on parallels with forward’s Aston Villa switch
