The 23-year-old Honduran was one of the surprise stars last season after Steve Bruce tempted him from Birmingham on a three-and-a-half year deal in the January transfer window.
Now Palacios is set to put pen to paper on an improved contract offered by Wigan in a bid to ward off the interest being shown by Manchester United and Aston Villa over the summer.

Palacios played a key role in Latics' survival quest after making his debut against Derby County at Pride Park in January, and went on to make 16 league appearances.

Wigan boss Steve Bruce said: "He was recommended to me by Arsene Wenger and I couldn't believe it when
Birmingham did not take up the option to extend his loan.
"He is such a talented player because he can play on the left and right of midfield, and also off the strikers.
"Wilson is a very adaptable footballer and he gives us something a bit different."

Chairman Dave Whelan confirmed last month there was growing interest in
Palacios and £10m-rated Antonio Valencia, but remains confident both would start the campaign at the JJB Stadium.

He said: "There is interest in both players, and there's bound to be because they are quality.
"But we haven't had an offer from any club and we hope we won't have any at all.
"We are told their agents have advised them to stay with us for at least another season so that they can continue to learn from Steve Bruce.
"We value them greatly because they're a couple of cracking lads and they seem happy to stay."