Loftus-Cheek, 22, has been out for almost two months with an ankle KO.
Palace want their loanee player to undergo surgery, but Blues would rather the England midfielder recovers in a more conservative way, report The Times.
Rest has so far not appeared to have helped Loftus-Cheek's ankle.
Loftus-Cheek has been back at Cobham undergoing treatment for the last month but is yet to return to training.
And he is reportedly frustrated at the situation which could threaten his chances to make it to the World Cup this summer.