In response to yesterday's Daily Mirror article, which claimed that Iceland would not be renewing Katona's contract when it expired in March, a spokesperson for the supermarket said: "We are in negotiations with Kerry for next year's contract.
"This was communicated to the Daily Mirror who chose to publish their article anyway."
The newspaper reported that Katona had been dropped because of repeated controversies and because the ads have been so widely criticised.
Katona was seen as an ideal representative for the brand when she was hired in 2005, following her win on ITV's 'I'm a Celebrity… Get Me Out of Here'. However, since then she has been criticised for smoking and drinking while pregnant and was also forced to deny claims that she takes class-A drugs.
The Iceland campaigns are made by Salford-based Tom Reddy Advertising.