The Tractor Boys signed the Denmark international in 2015 on a four-year deal, but despite being a regular first-team player under former manager Mick McCarthy, the club have opted against extending his deal.
Knudsen, while not being the best left-back in the Championship, is a solid performer and he enjoyed success with the Denmark national team at the World Cup in Russia last summer.
His performances in Russia saw him linked with Middlesbrough according to the Ipswich Star, but a deal to the Riverside Stadium failed to materialise and Ipswich have since allowed his contract situation to linger on.
Should the 26-year-old sign a pre-contract agreement with Dusseldorf in January, Ipswich will surely be kicking themselves as to why they either didn’t tie him down to a new deal or seek a sale last summer.
The situation highlights the poor decision-making the club have gone through over the past year, with the team looking considerably weaker than in previous years as they sit at the bottom of the Championship table.
Hiring Paul Hurst was an error as he lasted just 15 games, while allowing key players such as Joe Garner, Martyn Waghorn and Aaron Webster to leave without adequately replacing them was another big mistake.
Throw the Knudsen situation in and him potentially walking away for free and it hasn’t been a good year for owner Marcus Evans, with the 55-year-old entering his 12th year as owner of the Suffolk club.
Knudsen has started 18 matches for the Tractor Boys this season, and newly-appointed manager Paul Lambert recently recommended that Evans offered the left-back a new contract at the club (East Anglian Daily Times).