He has turned down the chance to take over at Championship rivals Fulham.
Clarke, who has been Royals boss for 11 months, was expected to take the manager?s job at Craven Cottage but talks broke down on Thursday.
Some reports said compensation between the clubs had already been agreed before Clarke?s U-turn.
Reading, who are in eighth place in the Championship ? four points and four places above Fulham ? held a press conference this morning in which Clarke said he had made the right decision to stay.
He insisted the potential move was not to do with money and what he wanted was the chance to speak to another club.
Clarke, 52, said: ?It wasn?t about money ? it was about ambition and professionalism. I didn?t want to think ?what if??
?What I have here is more mind-blowing. I?m happy with what I have here.
?This was the best option by a mile ? to stay here. All I wanted was the chance to speak to another club and weigh up what is best for me.
?I?m here for the rest of my contract I hope. It?s been a strange week but I know I made the right decision.?
Fulham sacked manager Kit Symons on November 8 and quickly made Clarke, who previously managed West Brom in the Premier League, their number one choice to replace the Welshman.
Some fans on social media have called for Reading to sack Clarke following his decision to meet with Fulham, but the Scot says he believes his job is still ?tenable? as the Royals target promotion this season.
Clarke said: ?I understand the angst and anger among supporters but when someone is prepared to pay money to speak to me, it?s something as a professional I have to look at.
?I went to Fulham and decided what I had here was better for me.
?I feel my job is tenable or I wouldn?t be here. Loyalty in football managers is a very precarious profession. That?s why you have to explore all options and make the right decision.
?I believe I still have support 100 per cemtand now I want to get back to success on the pitch.?
Clarke has 18 months of his contract to run with the Royals, took over from Nigel Adkins in December last year.
He has been in charge for 50 league and cup matches, winning 18, losing 18 and drawing 14 with a win ratio of 36 per cent.
Reading have gone without a win in their last five matches, which included a 4-2 defeat at Craven Cottage last month.
Reading face Bolton at the Madejski Stadium at 3pm tomorrow.