Crystal Palace are closing in on a deal for Wilfried Zaha before Monday’s transfer deadline, which would see Manchester United absorb a significant loss on a signing who has not worked out at Old Trafford.

Palace intend to pay £3m for Zaha, who is on a season-long loan back at Selhurst Park, with a further £3m in add-ons which would be paid if the winger meets performance-related targets.

But the deal stands to be some way short of the one that saw Zaha transfer from Palace to United in January 2013, although he was loaned straight back for the remainder of that season.

Zaha’s move was valued at £15m and although he has failed to meet the targets that would have triggered the add-ons, United parted with a downpayment of £10m and gave him a contract worth £35,000 a week.

The 22-year-old, who has two England caps, arrived at United for the 2013-14 season, when David Moyes had taken over from Sir Alex Ferguson, with high hopes of making an impact having starred in Palace’s promotion-winning campaign from the Championship.

But he made only four appearances for United, one of which came in the Community Shield, before he was loaned to Cardiff City in January 2014 for the second half of the season. Louis van Gaal, who took over at United last summer, had a look at Zaha in pre-season but he was happy to sanction his loan to Palace.

Alan Pardew, the new Palace manager, has taken the striker, Yaya Sanogo, on loan from Arsenal this month and if Zaha could be signed permanently, would be able to press for another temporary signing.

Premier League regulations permit a total of only two loans from clubs in the division at any one time. In January of last year Palace made permanent the signing of Jason Puncheon from Southampton, which allowed them to add Tom Ince on loan from Blackpool.

Pardew has used Zaha in all four of his matches in charge and the one-time Palace trainee has begun to look like the player he was when he left the club. Zaha never settled in Manchester and he says he feels as though he is now back at home. He is thriving on the confidence that Pardew has given him.

“I have a smile on my face because I am back on the pitch,” Zaha said. “There was a period where I thought: ‘What is going on here?’ But I said to myself that if I got minutes on the pitch I would get better and better. The gaffer has put his trust in me and I am trying to give it back and perform for the team. When I am here, I feel more confident. I have lived in south London all my life and my family is here. I cannot keep that in my head all the time because I could have another move, but Crystal Palace is my home.”