The Sun says that will give manager Alex McLeish the ultimate little and large partnership.
That means there will be a difference in height of 14 inches between them. Italian sources say Palermo want around £5million for Miccoli who bagged an impressive 19 goals in Serie A last season.
He will be 31 later this month but McLeish believes the player's pedigree will be a big plus for Birmingham.
Miccoli used to play for Juventus and has Champions League experience. He has also been capped 10 times by Italy, scoring twice.