Grayson admitted recently that filling the centre of his midfield was a priority for the club after Bradley Johnson and Neil Kilkenny – his partnership for most of last season – left Elland Road on free transfers.
United filled one vacancy by landing former Portsmouth and Sheffield United player Michael Brown on a one-year deal on Monday but Grayson is continuing to search for further recruits with the start of the Championship season on the horizon.
Smith’s mooted return to Leeds United looks increasingly doubtful with the Newcastle midfielder no closer to completing a transfer to Elland Road.
Rumours that Smith was on the verge of leaving Newcastle United for Elland Road circulated on Tuesday after one prominent bookmaker slashed the odds on the move taking place.
But Leeds are understood to be no closer signing him as they were when the transfer window opened.
The Championship club have expressed a firm interest in the 30-year-old but the task of prising him away from St James’ Park was always riddled with complications.
Smith is earning in the region of £55,000 a week and has one year remaining on his contract on Tyneside.
Newcastle are ready to release him on a free transfer but the player is believed to be unwilling to accept any deal which forces him to take a wage cut.
The former England international would receive a vastly decreased wage at Elland Road, though Newcastle are said to be contemplating funding a portion of the salary owed to him next season to facilitate a transfer.