The former Republic of Ireland international looked all set to leave the Hawthorns at the end of his contract next month after tweeting a thank you message to the Baggies fans.
Palace looked to be in pole position to sign the 32-year-old if he left Albion after the Eagles spoke to Reid about a possible move to Selhurst Park.
However, the former Blackburn utility man is thought to have resumed talks with West Brom in the last few days and a source close to the club says the two parties are edging towards an agreement.
The news will be a blow to Palace boss Ian Holloway’s plans as he desperately looks to add some Premier League experience to his squad.
Hibernian head coach Neil Lennon claimed referee John Beaton failed to protect his players from 'disgraceful' challenges during a 1-1 draw with St Johnstone.
St Johnstone manager Tommy Wright has accused Neil McCann of deflection tactics as he denied reporting the Dundee boss to the Scottish Football Association.