Villa are expected to make a £6million for the England Under-21 winger, which would be welcomed by Newcastle owner Mike Ashley who is desperate to reduce the wage bill.
A source close to the former Leeds ace said: "James is happy to stay but knows the situation at Newcastle. Keegan has to sell before he can buy - a bid will be accepted. Villa are very keen.
"Villa are moving forward and it would be a great move for him considering the state Newcastle are in."