The Sun says the England striker is desperate to rejoin old boss Harry Redknapp at White Hart Lane and the deal should still go ahead.
But the move is complicated as Spurs insist they are entitled to a £4m payment if Defoe joins another club - even if it is them!
Spurs value the star at £11m - which they say is actually worth £15m with the sell-on sum included.
But Pompey want nearer £19m, even though they still owe money to Tottenham from when they first bought Defoe last January.
A Pompey insider said: "The two clubs are still apart on their valuations and Portsmouth can't believe Tottenham actually think they are entitled to their own sell-on clause. It's unbelievable."