Blackburn keeper Friedel in talks with Aston Villa
The 37-year-old signed a contract extension at Ewood Park in February this year but has repeatedly been linked with the midlands club in recent weeks.
And O'Neill told Villa's website: "We've been given permission to talk to the player and that's something that we want to do. But there are still lots of things to happen.
"We're in the process of strengthening the squad and this is all part of our efforts to add strength in depth."