Wolves are seeking a new manager after Sunday's dismissal of Vitor Pereira.
Advertisement
Advertisement
Pereira departs with Wolves bottom of the Premier League table and also winless in the competition.
O'Neil is being mentioned as a candidate for the job, having been axed almost a year ago from Molineux.
He has remained a free agent since being dismissed December.
BBC Sport says another name being discussed is Rob Edwards, who took charge of Middlesbrough in the Championship this season.
Edwards led Luton in the Premier League last season and is a former Wolves player.