New Eagles boss Sam Allardyce was reportedly keen on making the Wales international, who starred for his country at Euro 2016 last summer, his first signing since taking over the reins at Selhurst park.
Palace have struggled defensively this season, with only Hull and Swansea conceding more goals in the Premier League so far this term, but it does not appear Davies will be the solution to their problems at the back, as he has reaffirmed his desire to fight for a regular first-team berth at Spurs.
"I’m happy as it is at the moment.. I’m still young and I’m learning a lot here," the 23-year-old said. "The competition has definitely improved me as a player, and when I get the opportunities I have to try to do my best and make a mark and show what I can do."
Davies has spent most of the season acting as understudy to Danny Rose at White Hart Lane, starting just three league games, but he is relishing the challenge of trying to dislodge the England international in the starting line-up.
He added: "When you’re competing with someone, you have that drive to do as well as possible. I like to think it works both ways - that Danny and I have both improved in the time that we’ve been competing with each other to be the best we can be. You can see with Danny, some of his performances have been superb this year."