The England defender has not seen eye to eye with Elland Road boss Peter Reid in recent weeks.
And it is understood that he has been told he can go and that Wolves are considering a move.
After yesterday's hammering at Blackburn, boss Dave Jones may now decide to bolster his squad with proven English talent before the transfer window shuts.
Mills missed out on the game against Newcastle today along with team mate Nick Barmby, but he was picked for the England squad for Wednesday's friendly against Croatia.