The 24-year-old has not figured for Villa since August, and his season has been hampered by a shoulder injury.
He underwent a shoulder operation in September, but is now pressing again for first-team action.
Last season Davies was a first-team regular under O’Neill, and ironically was in the side that sent Newcastle down on the final game of last season at Villa Park.
Davies played for Wimbledon, Luton Town and West Brom before his move to Villa.
Davies also has three caps for England Under-21s.