Watford forward Diego Fabbrini is to be released from his season-long loan deal with Middlesbrough in order to join Birmingham, reports BBC Tees Sport.
It is believed the 25-year-old will leave Boro to sign for Birmingham on a more permanent basis.
Since arriving at the Riverside at the beginning of the season, the Italian has scored six goals in 24 appearances.
Fabbrini spent two months on loan with Blues last season, making five league appearances.
Boro are currently second in the Championship, while Birmingham are just outside the play-off places on goal difference.
Find all the latest football transfers on our dedicated page.