Andros Townsend is understood to be keen on returning to Newcastle United only six months after they sold him to Crystal Palace for £13m.

With Rafael Benítez similarly enthusiastic about a potential reunion with the sometime England winger on Tyneside and Sam Allardyce willing to lose Townsend, the stumbling block is Newcastle’s desire for a loan deal with a view to a more permanent transfer in the summer.

Palace, though, want their money back now so Allardyce can reinvest in the transfer market as he attempts to keep the south London club in the Premier League. Strongly placed to win promotion from the Championship, Newcastle have ample cash reserves but Mike Ashley, their owner, has provided Benítez with a rather less generous budget this month than had originally been envisaged.

Palace are due to pay the next £3m instalment due to Newcastle this month but it is understood that could become a loan fee, with the Championship side paying £10m in the summer to make the deal permanent. That could provide Allardyce with funds for Hull’s Robert Snodgrass, while they are also interested in signing Stewart Downing from Middlesbrough on loan, with Aitor Karanka having informed the former England winger that he is free to leave this month.

It is hoped a compromise will be reached in the next week or so which will end an unfortunate interlude in Townsend’s career. Indeed, the 25-year-old – who signed for Newcastle from Tottenham Hotspur last January and left with a slightly heavy heart after building a strong rapport with Benítez – is believed to now regret swapping St James’ Park for Selhurst Park in the summer. Although Allardyce had long admired his game, Townsend struggled badly under his predecessor, Alan Pardew, and has failed to impress under his latest manager.

Much now hinges on Ashley and whether he is minded to reverse his decision to refrain from investing heavily in new players until Newcastle are back in the top tier.

Meanwhile, Allardyce has refused to give up hope on adding Carl Jenkinson and Patrick van Aanholt to his relegation-threatened squad this month. “Until the chairman rings me up and says the Carl Jenkinson deal is dead, it is still ongoing for me and the same with Patrick van Aanholt,” Allardyce said. “Until we hear that Sunderland are not selling, we are interested. Whether they have got any further, the chairman will update me later on, today or tomorrow.”

Allardyce has added only one new face – Jeffrey Schlupp from champions Leicester – to his side, who are just one place above the drop zone.

The former Sunderland manager claimed he missed out on midfielder Jake Livermore, who completed his move from Hull to West Brom on Thursday. During his short spell at the Stadium of Light, Allardyce signed some players in his last January window which he believes kept the club in the top flight. “I wish I could be very confident and say I could find four players like I did at Sunderland who will all make such a big contribution to the team, and that they would save the club from relegation,” Allardyce added.

“I will try my hardest in this window to buy or loan players to improve the squad.

“We are not sure where we will end up. We have got one, but have missed about 20 where offers have gone in. We are in for a lot of players and at the moment we are not having too much success.”