The Spaniard has just one year lef ton his contract on Tyneside but has rejected both a new five-year deal and a one-year extension this summer as the club fails to meet his demands.
Salary is not thought to be an issue, but Benitez is asking for certain promises to be made regarding recruitment and improving the academy, neither of which have been forthcoming so far.
The five-year deal was the first one offered, before the year-long extension followed around the time Spain were looking for an interim boss.
However, the first deal failed to meeet his demands and the former Valencia and Liverpool boss saw a short-term solution as pointless.
Nevertheless, Benitez is believed to be happy in the North East, having told Newcastle chiefs he could well remain at the club for a decade, providing they meet his demands.