The Scotland international played 15 games for the Lions earlier in the season but returned to St James’ Park after breaking his ankle during the 1-1 draw at Motherwell in November.
Technically Kerr is still on loan at Livingston and, with a return to full fitness close, the Lions’ chairman Dominic Keane is keen for that arrangement to continue.
"It's getting to the stage where we need to bring it to a head, but ultimately it's still Newcastle's decision,” he told the Edinburgh Evening News.
"There's been a bit of chat and a bit of debate and the discussions are ongoing. We would like him to come back and if he does, great.
"If he doesn't then there are certainly one or two other players who we have identified."
Kerr’s United contract expires at the end of the season and he has previously indicated that he is keen to find a new club where he will be a first-team regular, in order to further his international career.