BATON ROUGE, La. (AP) _ Tennessee Athletic Director Doug Dickey announced Friday night that the university has extended the contract of basketball Coach Don DeVoe for two years.

DeVoe's contract, which was to have expired at the end of the 1988-89 season, now extends through the 1990-91 season.

The announcement came shortly after Tennessee bowed out of the Southeastern Conference basketball tournament in a 67-60 loss to Florida, closing out a 16-12 season.

There had been speculation earlier this season that DeVoe was about to be fired.

''This is obviously a controversial matter,'' Dickey said. ''I am aware that many people have orally commented or written to us expressing their feelings about the coaching situation.''

''I have confidence that there is a renewed strength in our program that will carry over into the 1988-89 season. Coach DeVoe's personal commitment to our recruiting, the work of his staff and the great basketball facility on our campus can give us a promising new future.

''I think that next season Tennessee can be a contender for the Southeastern Conference championship based on the return of a predominantly senior squad.''

DeVoe has a 185-125 record in 10 seasons at Tennessee. His teams have appeared in five NCAA tournaments and two NITs.