Rafa Benitez is desperate to sign Townsend before tomorrow night's transfer deadline.
And United are understood to have made an offer to sign the 25-year on loan with a view to a permanent deal.
Townsend was sold to Palace for Â£13million last summer in the wake of the club's relegation, but the England international has struggled for form at Selhurst Park.
The Gazette understands that Newcastle have tabled a loan fee for Townsend, which is being considered by Palace.
Townsend's future is set to be decided on deadline day.
Palace are interested in taking United's Chancel Mbemba on loan, and the defender could yet make a temporary switch to the Premier League club as part of any agreement over Townsend.
Newcastle manager Benitez will speak to the media tomorrow ahead of Wednesday night's home game against Queens Park Rangers.
United are second in the Championship table.