LONDON, Sept 27 (Reuters) - Mercedes face a difficult decision over Michael Schumacher's future in Formula One and discussions are going on with the seven-times world champion, team principal Ross Brawn said on Thursday.
The 43-year-old German, the sport's most successful driver who ended three years of retirement to come back in 2010 with Mercedes, is out of contract at the end of the season.
The British-based team are keen to lure Lewis Hamilton from McLaren, although the pendulum of paddock speculation has swung back towards him staying where he is.
Critics of Schumacher, winner of a record 91 grands prix, say he is showing his age and is a shadow of the man who dominated the early years of the century with Italian glamour team Ferrari.
Germany's mass circulation Bild newspaper suggested Schumacher was too old for Formula One and questioned his reaction times after he crashed into the back of Frenchman Jean-Eric Vergne's Toro Rosso in Singapore at the weekend.
That blunder, one of several this season, earned Schumacher a 10-place grid penalty for next week's Japanese Grand Prix at Suzuka.
"It's still under discussion, I'm afraid," Brawn, who helped Schumacher to win all his titles at Benetton and then Ferrari where he was technical director, told BBC radio when asked about the driver's future.
"Michael has been a huge asset to the team, he's really taken us forward. I do think Michael contributes an awful lot, so I think the decision for Michael to stay or not continue is a difficult one," he added.
"Obviously he's very involved in that decision, and discussions are ongoing at the moment."
Germany's Nico Rosberg has a contract with Mercedes for next year so the team are waiting for 2008 champion Hamilton.
If the 27-year-old Briton opts to stay with McLaren, Mercedes must decide whether to extend Schumacher's contract or replace him with an up-and-coming young driver such as Force India's Paul Di Resta.
Di Resta won the German touring car championship with Mercedes and shares a manager with Britain's Jenson Button, who won the 2009 title with Brawn GP - the team that became Mercedes GP.
The Scot has yet to stand on the Formula One podium but he finished fourth in Singapore.
Schumacher has had only one podium finish, in Valencia this year, since he returned to the cockpit and has had seven retirements in 14 races in 2012.
Rosberg won in China, the first victory by a Mercedes works team since 1955, but has also been outqualified by Schumacher 8-6 so far on Saturdays.
Red Bull's double world champion Sebastian Vettel, Schumacher's compatriot and friend, said this month after the veteran's 300th race that the German was still a true fighter on the track and "hasn't lost it".
Brawn indicated an announcement could still be some weeks away but said Mercedes were an ambitious team. Of Hamilton, he said: "He's a very good driver; a very good driver." (Editing by Clare Fallon)