The Scotland international would strengthen a weak area in the Palace squad.
The Clarets had two bids for the player rejected last week, claims the report, and now Palace are hopeful of bringing him to Selhurst Park – as they continue their summer recruitment drive.
Blackburn are currently under a transfer embargo which sees them becoming an easy target for other teams.
Palace reportedly watched Hanley in action against Wolverhampton Wanderers yesterday and will be making a move for the player in the coming days.
Palace currently have centre-back options in the form of Scott Dann and Damien Delaney but Adrian Mariappa and Paddy McCarthy are expected to be moved on whilst Brede Hangeland is a patch on his former self.
Hanley, a Scotland international with 17 caps, is the current captain at Ewood Park and he has established himself as one of the top young defenders outside the Premier League.
At just 23-years-old Palace would also be getting their hands on a player for the future, with vice-captain Delaney no longer a spring chicken.
Hanley would face a fight getting in the first team at Selhurst Park ahead of the current pair, but it is a fight The Eagles need to happen.