Wolves are seeking a new manager after Sunday's dismissal of Vitor Pereira.
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Pereira was axed after defeat at Fulham on Saturday left Wolves bottom of the Premier League table.
Former Wolves manager Gary O'Neil and ex-Celtic boss Brendan Rodgers are already among the favourites for the job.
But Muscat is also emerging as a candidate. The Australian is coming to the end of his contract at Shanghai Port.
The former Wolves defender was considered for the Rangers job, before turning them down.
Muscat would be open to a return to Wolves, where he spent five years and played over 180 games. With Shanghai Port, Muscat led the club to the League and Cup Double last seasin.