Wolves close in on Atletico Madrid centre back Felipe - source

Both clubs had been close to reaching an agreement for the defender in December, in what would have been a package deal that included him and forward Matheus Cunha, both managed by Giuliano Bertolucci and Kia Joorabchian.

The clubs agreed only on a loan for striker Cunha at the time, but central defence remains a key area for Wolves as they look to pull clear of the relegation zone.

Atletico and Wolves resumed talks again over the weekend as the Spanish club works hard to try to find a solution for Felipe who will be out of contract at the end of the season, and is currently out of favour with manager Diego Simeone.

Eliminated from European football after finishing last in their Champions League group, Atletico have turned their attention to the January market as they seek to improve their financial situation.

Following the Cunha loan deal with Wolves, Atletico announced on Wednesday that forward Joao Felix would also be leaving on a loan to Chelsea until the end of the season.