The Independent understands that the new offer was submitted earlier this week and was immediately knocked back by Chelsea, who want the 19-year-old full-back to sign a new and improved contract at the club.
Palace have also submitted an alternative proposal of an 18-month loan with a significant upfront fee, however, Chelsea have rejected that approach too and want James to remain at the club this season.
James, who is still recovering from ankle ligament damage, has been given guarantees by Frank Lampard and Jody Morris that he will receive significant first-team minutes but is yet to commit to any new deal.
Chelsea have already rejected approaches from Palace, Brighton, Bournemouth and Newcastle for the England youth international this summer.
How Chelsea can line up under Frank Lampard 2019/20
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The academy graduate, who captained the club’s triumphant youth team that won back-to-back U18s Premier League and FA Youth Cups, signed a new four-year deal with Chelsea last summer before moving on a season-long loan to Wigan, where he started 45 Championship games and earned a spot in the league’s team of the season.
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