Wolves boss Mick McCarthy wants to sign striker James McFadden after a successful trial period at the club.
McFadden parted company with Birmingham at the end of last season after an option on his contract was not taken up by the Carling Cup holders.
McCarthy said: "I hope there are some developments with James McFadden."
He continued: "He has looked fine this week.
"I want to sign him but I don't know how far we are down that road."
The Scottish international is keen to resurrect his career after suffering a cruciate knee ligament injury 13 months ago.
He joined Birmingham in January 2008 and made 88 appearances, scoring 14 goals.