England midfielder Frank Lampard secured the win at Stamford Bridge with a 29th minute penalty to take Chelsea, transformed by a 111 million pound ($190.9 million) spending spree since the July takeover by Russian billionaire Roman Abramovich, top on 35 points. United are third on 31 points.

"Obviously I think it is a terrific challenge now. I'm actually quite pleased that Chelsea are top at this moment in time," Ferguson told a news conference on Monday after United announced they had won a new sponsorship deal from Vodafone worth 36 million pounds ($62 million) over four years.

"I think it's good for the game, I think that people are maybe getting fed up with Arsenal and Manchester United all the time. The last few years that's certainly been the case.

"To have another side (Chelsea) with a genuine chance of winning the league is good for us. But I do think that once we reach the turn of the year, in February, March and April, when we historically normally do well, will be a very testing time for everyone. I'm confident the character of my players will rise to that.

"When the chips are down they don't often fail me. They are strong characters which has been shown time and time again."

LAVISH SPENDING

Asked if the lavish spending at Chelsea by Abramovich had further widened the gulf between rich and poor and created a three-club elite, Ferguson said: "What Chelsea have achieved is good for them and I don't think you should deny anyone progress.

"In my time in football there has always been a gulf. The big clubs have always been big clubs. At the moment there are three but can you really rule out Liverpool or Newcastle as big clubs?

"Maybe they are not having the results that Chelsea, Arsenal or ourselves are having, but you can't say they are not big clubs."

Both Ferguson and United chief executive David Gill confirmed that negotiations to extend Ferguson's contract at Old Trafford were ongoing.

Ferguson, who has been in charge at United since 1986, signed a three-year deal in February 2002 after changing his mind about retiring.

"There is no pressure on either side. Neither party has put a deadline date on it," said Gill.

"We're working, both parties want it to happen and therefore it will happen. Discussions are progressing very satisfactorily. That's where we are at."