The Foxes paid around £8m a matter of weeks ago to land Leo Ulloa from Brighton, making the forward their most expensive ever player.
But with the added income of Premier League football, Nigel Pearson is prepared to blow that sum out of the water with a £10m offer for Deeney.
The Hornets star was one of the Championship’s leading marksmen last term, and has been attracting interest from QPR.
Harry Redknapp is keen to ensure that the 26-year-old heads to Loftus Road, but Leicester are desperate to get him in the blue shirt as they bid to avoid relegation.
The King Power Stadium side have already lodged a bid of around £7.5m for Deeney, yet Watford knocked this back as they hold form on their £10m price tag.
Now Leicester are considering matching their demands in a bid to improve their options up front.