The Champions League's final qualifying stage draw is later on Friday and O'Neill is desperate to get in defensive cover as three of his first choice defenders are currently injured, with striker Chris Sutton having had to drop back to fill the gap.

Laursen has only just returned from a long-term injury - a dislocated shoulder - but O'Neill is known to have been an admirer for some time.

A Celtic spokesman confirmed on www.celticfc.net: "Dialogue has taken place between both clubs and there is every prospect that the player could be joining Celtic some time next week."

Laursen, also been linked with Rangers, was a key member of the Hibernian side that challenged the Old Firm two seasons ago under Alex McLeish, who is now at the helm at Ibrox.

And with Uruguay international Ulises de la Cruz about to join Aston Villa, current Hibs boss Bobby Williamson should see the club's fears about a lack of cash solved within a few days.

De la Cruz is expected to fetch around £2m (€3.1m), and Laursen is valued at around the same mark.

Williamson is set to use some of the cash to offer German midfielder Mathias Jack a new deal and can also finance a deal for Rangers striker Billy Dodds.

Williamson almost captured Dodds when he was boss at Kilmarnock but the player's wages proved too much for the Ayrshire club.