Allardyce keen to keep Taylor

The 21-year-old was away on international duty with England's Under-21s last week, captaining his side to European Championship qualifier victories in Montenegro and Bulgaria.

Local hero: Newcastle defender Steven Taylor

However, in his absence, his father Alf, who represents the Greenwich-born player, revealed he had turned down the Magpies' offer and voiced his disappointment at the financial package.

Taylor's current deal does not expire until the summer of 2009, but news of the stalled talks has not gone unnoticed by a series of potential suitors, who have seen him emerge from the club's academy to establish himself in the senior squad.

He will look to return to club action at Derby on Monday evening with Allardyce hoping an agreement can be reached, although the manager insists the club will not be held to ransom.

"Steven Taylor is a key member of our squad. We want him to stay, apparently it sounds like he wants to stay, so hopefully we can resolve the problems," he said.

"At the moment, we seem to be some way off, but we won't get sucked into paying somebody that we think is asking for too much.

"We want to give it a realistic look, and we have already started that process with the likes of Charles N'Zogbia, to push on to Nicky Butt and people like that who are in the last year of their contracts.

"That's the next thing we have to do now that the window is shut. Hopefully very shortly, everybody will have agreed and we will have a much more settled camp.

"From my point of view, it's always a little bit disturbing when people are talking about contracts while you are playing Premier League football. It can upset the player on the field, and that's the last thing we want."

Newcastle were clearly unhappy that the situation had been made public with Allardyce keen to conduct club business in private.

He said: "The position is that we offered what we considered a very good contract for a player of his age and his experience, and if they have turned it down, then that's fine.

"The disappointing this is - and I don't want to get into any slanging matches - is that it was publicised in the papers, and I think that was wrong by his father. But I will cover that when we get sat down to talk about it again."

Taylor has lined up at right-back for the Magpies in the last two matches with Claudio Cacapa partnering David Rozehnal in central defence.

However, competition for places has increased in his absence with deadline day signings Habib Beye and Abdoulaye Faye now ready to stake their claims.

Turkey midfielder Emre has returned from international duty with a knock which is likely to keep him out, but Mark Viduka has shaken off his hamstring injury to leave Allardyce with a pleasant selection headache.