Isco’s contract at Real Madrid runs until 2018 and there are claims Barcelona want to sign the player.
Barca are said to have been involved in secret transfer talks over a summer swoop for Isco.
The 24-year-old has started just six of Real’s last 20 games, having struggled to get into Zinedine Zidane’s starting XI since the manager took over last year.
Real Madrid wages revealed: Which stars earn most?
Fri, March 24, 2017
Click to reveal every Real Madrid player's weekly wages, according to Totalsportek.com
1 of 25
Click to reveal every Real Madrid player's weekly wages
Isco’s contract situation has dragged on since last summer and Real appeared uninterested in addressing the issue.
But since the emergence of Barca’s interest the Bernabeu club have kicked into action.
According to Spanish newspaper Marca, Real want Isco to pen a new contract next year, which will run until June 2024.
Real Madrid want to give Isco (left) a new contract to block Barcelona's interest
Get Quotes on Home Insurance
Manchester City are also supposedly interested in landing Isco
Isco is currently away with Spain during the international break
The playmaker will earn £5.2million a season from the deal, which equates to £17.1m AFTER tax over the duration of the contract.
Manchester City manager Pep Guardiola is also said to be interested in Isco, who joined Real from Malaga in 2013.
There were claims last summer that the player would be tempted by a loan move back to Malaga but no deal ever materialised.