The London side were put to the sword by Manchester City on Sunday, losing 5-1 in dismal fashion, and manager Harry Redknapp will be keen to bring new faces to the club before the transfer window closes.
Honduras international Palacios has struggled to hold down a first team place since his arrival from Wigan in January 2009, and has not featured this season.
Redknapp has confirmed that a medical has taken place at the Brittania, with a £8million transfer being touted.
Meanwhile, Parker missed The Hammers’ trip to Nottingham Forest at the weekend, with boss Sam Allardyce confirming negotiations were underway.
“There are some negotiations going on and I don’t think he would be mentally right to play – it will come to fruition in the next 24 hours or so,” the former Bolton coach told Sky Sports.
A deal worth £6 million is believed to be on the verge of completion, with Jake Livermore potentially moving to Upton Park on loan as part of the package.