Although the deal is far from done and Gascoigne himself has not even talked to Palace yet, it seems clear that Dick Advocaat, who will take over from Walter Smith as Rangers manager in the summer, does not see him as part of his plans.
A proposed transfer has been agreed with Mark Goldberg, Palace's prospective new owner, who believes Gascoigne and Terry Venables, the player's former manager with Tottenham and England, can play major roles in the south London club's future.
Goldberg, who has an agreement to buy Palace by the end of the year provided he can raise the required pounds 30m, yesterday gave Venables more time to think over an offer to become manager. However, he said the signing of Gascoigne was not necessarily dependent on Venables' decision.
Goldberg has long been an admirer of Gascoigne - Palace's interest in him was first revealed in The Independent last October - and plans to meet the player early next week to discuss the move.
However, the prospect of joining a club bottom of the Premiership may have limited appeal for Gascoigne, who is unfit because of a calf injury. Playing for a team embroiled in a relegation battle is unlikely to help his preparations for this summer's World Cup.
Mel Stein, Gascoigne's advisor, last night played down talk of a move to Palace. "They may well have agreed a price in principle, but certainly Paul hasn't agreed to anything whatsoever," he said.
"Paul's view is that he simply wants to get himself fit first before he focuses on anything and at the moment he's very much a Rangers player. He's made no firm decision to leave Rangers, and certainly won't be making a firm decision to leave Rangers to go anywhere until he's fit. And that's going to be at least a week or so."
Rangers have agreed a fee of pounds 3m, with further cash based on appearances. However, the deal could cost Palace pounds 8m in total. The appearances element is reported to be another pounds 500,000 after 40 games for Palace and the same again after another 40. Gascoigne signed a new contract with Rangers last year said to be worth pounds 40,000 per week and if he were offered a three- year deal at Palace it would probably be worth up to pounds 4m or more.
Bearing in mind Gascoigne's fitness record - and the fact that Palace's prospects of Premiership survival this season have been hit hard by the lengthy absences of other injury-prone big-money signings - there will be many who will question the wisdom of the move.
Goldberg and Ron Noades, the Palace chairman, have been at odds over the future direction of the club. Noades had previously insisted that Goldberg himself should largely fund the move for Venables because he was not prepared to commit the club to expenditure it could not meet in the event of the Goldberg takeover not going through. Goldberg - who wants the present manager, Steve Coppell, to stay at the club in a back-room capacity if Venables takes over - said last night that he would not sign Gascoigne "without first consulting Terry, the chairman Ron Noades and Steve Coppell".
Goldberg is believed to have discussed the manager's position with Newcastle's John Barnes, but his first choice is Venables, whose contract as coach of Australia expires this summer. "I believe that with at least one more meeting, and possibly two, I will be able to persuade Terry to join us," Goldberg said.
Venables, who flew to Spain on business yesterday said: "There is a possibility but I wouldn't go any further than that at the moment." He added: "My original thoughts were to wait until the end of the season because I have got some options then."