The Eagles are said to be hopeful of concluding his move from Newcastle United.
The winger has agreed a move to Selhurst Park after the Eagles activated a £13 million clause in his current contract with Rafa Benitez’s side.
They had first opened talks to secure his signature at the beginning of the month but Townsend put the decision on hold while he went on holiday this summer.
He also wanted to take his time to consider his options, with several other Premier League sides such as Southampton, West Ham United and Watford also keen on him.
However, according to the Telegraph, he has been persuaded that a move to Palace represents his best choice and they are hoping to conclude a deal in the next two days.
The news will come as a major blow to Rafa Benitez, who will be cursing the decision by his predecessors to allow a release clause to be inserted into Townsend’s contract.
It remains to be seen if he will target a like for like replacement for the former Tottenham man, especially given how well he performed for him at the end of last season.