The 24-year-old has made just three substitute appearances in the Premier League this season.
Townsend – who has played 10 times for England – was dropped for a Europa League match in November after a row with fitness coach Nathan Gardiner.
Newcastle have already signed midfielders Jonjo Shelvey and Henri Saivet in this transfer window.
Townsend joined the Tottenham academy aged eight but did not become a first-team regular until the start of the 2013-14 season, by which time he had been sent out on nine separate loan spells.
This season, though, he has only started three games – two in the Europa League and the Capital One Cup defeat by Arsenal.