Foxes boss Craig Shakespeare tried and failed to sign the 26-year-old in the summer after he played a key role in helping Palace stave off relegation to the Championship under Sam Allardyce’s guidance in the second half of last season.
A £27million bid was said to have been rebuffed by the Eagles for Townsend, but reports are now claiming that a fresh bid will be forthcoming in the New Year.
Palace had no intentions of losing Townsend, but it is being suggested that, with key striker Christian Benteke struggling with a knee injury and facing another month on the sidelines, current boss Roy Hodgson will sell Townsend to raise funds to add another quality forward to his options for the second half of the season.
At the moment, Townsend’s fit-again fellow winger Wilfried Zaha looks like returning from injury in a striker role when the Premier League resumes against reigning champions Chelsea at Selhurst Park this weekend due to the lack of options in that position.
There is also the possibility that Townsend might push for a move in January given that Palace are currently rooted to the foot of the table having become the first team to have lost their opening seven matches without scoring a goal.
Everton target Jack Wilshere has sparked a scramble for his signature after confirming he is leaving Arsenal this summer.
Tottenham's hopes of landing Wilfried Zaha have been hit by the news Crystal Palace have offered him a bumper new deal to stay.
Ryan Giggs says Gareth Bale would be the perfect fit for Manchester United but has doubts over whether he will leave Real Madrid.
Manchester City's attempts to sign Riyad Mahrez could be in doubt again as reports claim Leicester only want a straight cash deal.
Eden Hazard has suggested his future at Chelsea hinges on Antonio Conte and says Real Madrid know what they need to do to sign him.