HITC Sport understands Magpies have other targets lined up.
Newcastle boss Rafa Benitez wants more competition at centre-half to compete with Chancel Mbemba and Jamaal Lascelles.
Grant Hanley of Blackburn Rovers
Hanley had emerged as their top target with Blackburn initially setting a £5million asking price, which Newcastle were ready to meet - but since their initial approach, the Lancashire club have now decided they want £6million.
Newcastle are not ready to get into an auction and will look elsewhere and HITC Sport understands they already have targets in mind.
Ideally they want Middlesbrough's Daniel Ayala - who Benitez knows well from his time at Liverpool, and whose contract is due to expire in just 12-months.
Tom Lees of Sheffield Wednesday
But a deal for Ayala will not be quick or easy and remains unlikely according to Boro - so Newcastle are looking at other options, with HITC Sport understanding Sheffield Wednesday's Tom Lees is very high on their list.
Lees is also being looked at by newly promoted Burnley - who have him in mind to replace Michael Keane, should he leave Turf Moor this summer.
Derby County's Richard Keogh is also understood to be on Newcastle's radar as they want someone with experience at Championship level.