Discussions are ongoing to find a positive outcome to the protracted talks, but the St James’ Park club have fallen short with a recent offer, believed to be their second, for the centre back.
Palace, who are exploring a return to the club for legend Wilfried Zaha, value Guehi at a minimum £65million and do not feel Newcastle’s improved deal is enough to part with the England star.
There is no confirmation as to the value of Newcastle’s offer but sources have indicated it is just shy of the £50m mark.
Talks are being led by Palace co-owner Steve Parish and Newcastle sporting director Paul Mitchell with negotiations described as productive despite the fact an agreement is yet to be struck.
Palace are holding out for a minimum figure of around £65m but there is some hope that a deal can still be struck
Indeed, there remains some hope that a deal can be reached in the coming days, but it is clear Newcastle must return with a bid closer to Palace’s valuation.
Guehi will enter the final year of his contract next summer, opening up a real possibility of him leaving for nothing in 2026 - a scenario they Palace want to avoid.
With that in mind, Newcastle remain hopeful a deal to sign Guehi is achievable.
Palace are interested in Maxence Lacroix and Trevoh Chalobah if Guehi leaves.
Wolfsburg defender Lacroix is believed to be the favoured option.
Meanwhile, Palace are interested in re-signing Zaha - who left Selhurst Park for Galatasaray last summer.
The Turkish side are open to offloading the Ivory Coast international with Palace considering the deal as a viable option.
Talks over a potential loan return for Zaha are ongoing.