My Working permit is expired, can i apply for a new one without having to leave china?

Dear All,

Somehow i managed to put my self in quite a rare position. Let me explain the situation;
I have been working in mainland on my working permit for a year now and i need to apply for a new working permit in order to continue my work here.
The problem is that my passport got lost 2 months before the expiration date of my working permit. Meaning: I first have applied for a new passport (with all the hassle that follows..) Now this I've already done, and now its only a wait until the passport is finished.

However the passport will arive about 3 days after the dead line that allows me to extend my working permit. Meaning that I have to do the whole process of asking for a Z type, then working and recidence permit again!
Needless to say: my boss made me employee of the month.

I've heard at least 5 different stories on how to handle this, differing between going to prison and just simply applying in china it self for a new Z type.

Could someone pleases tell me how to handle this?