Spurs agreed a pre-contract with the German international earlier in the January window, with a view of taking him to White Hart Lane on a free transfer when his contract with Schalke expires in the sumer.
However with tough tackling midfielder Sandro out for the rest of the season after undergoing knee surgery, Spurs are trying to agree a small fee with Schalke in order to push the move through before the close of the winter window.
According to the Evening Standard, Holtby is keen to make the switch to the Premier League in January, and has already completed the necessary medical.
However the two clubs are yet to agree a fee, with Tottenham hoping to pay just under £1 million for the 22-year-old, while Schalke are believed to be holding out for a fee of around £1.6 million.
Schalke general manager Horst Heldt revealed yesterday that the German club had turned down Tottenham's initial bid.
He said: "Tottenham have made an offer, which was not acceptable, therefore it was rejected.
"The transfer window is still open and Lewis has not become any cheaper."
Spurs’ January transfer plans seem to be gathering pace elsewhere after manager Andre Villas-Boas was spotted watching Celtic’s comfortable 4-0 win over Dundee United last night.
Striker Gary Hooper and midfielder Victor Wanyama are believed to be the reasons behind the Portuguese coach’s visit to Celtic Park.