According to Press Association Sport, the French side, who had a £14 million bid rejected on Sunday, have made an improved offer and will now seek to tie up a deal subject to personal terms and a medical.
The news will come as a blow, if not a surprise, to manager Alan Pardew, who admitted on Monday afternoon he was not confident of retaining the services of the 28-year-old France international after PSG formalised their interest.
Details of the agreement are yet to be released, but Newcastle have been insistent all along that Cabaye would only be allowed to leave if their valuation of him was met, and that is understood to be in excess of £20m.
Pardew always knew he would struggle to hang on to his star man if PSG flexed their financial muscle, and he will now hope the proceeds will allow him to land a replacement before Friday's transfer deadline should the deal be completed.
That, of course, was not the case when Newcastle sold striker Andy Carroll to Liverpool during the final few hours of the January transfer window in 2011, but the Ligue 1 club have been left in little doubt that any deal would have to be done sooner rather than later to allow the Magpies to plug the gap.
Pardew was asked in Monday's preview press conference for the Barclay's Premier League trip to Norwich whether he was confident of keeping Cabaye, and he said: "You are talking to someone who lost Andy Carroll with eight hours to go, so am I confident?
"No, I'm not confident, and I don't think any team not in a Champions League position or fighting for a Champions League position could be."
Newcastle currently lie in eighth place and, barring an unlikely charge into the top four over the next four months, are unlikely to be able to offer Cabaye, or indeed any other player, Champions League football next season.
However, Pardew insisted that is eminently preferable than the position in which he found himself back in January 2011, when leading scorer Carroll was sold without a replacement being brought in and with top-flight survival far from assured.
He said: "Well, you are talking to a manager who actually when he lost Andy Carroll lost a massive part of a team that wasn't safe. We didn't have 36 points when we lost Andy Carroll, so it was a hell of a blow.
"I still maintain that was one of my best periods as a manager at this football club, getting us safe that year, so in terms of my mentality, I'm just strong about it. I am strong whatever happens. I am the manager and I have got to deal with it.
"I don't want him (Cabaye) to go. We have not indicated for one moment here from the owner down to any of my staff that we want him to go, not one iota.
"We would need to bring somebody in, for sure. You can't lose a player of that quality and not replace him."
Cabaye's departure would be greeted with dismay on Tyneside, with the former Lille playmaker having established himself as the heartbeat of the side during his two and a half years at St James' Park.
However, if PSG have matched owner Mike Ashley's asking price, the club will have reaped a handsome return on their £4.3m investment in him.
Arsenal tested the water with a £10m bid, which was swiftly rebuffed, during the summer, and although the player's head was turned, he was eventually re-integrated into the team.
However, the prospect of him seeing out his contract on Tyneside looked increasingly forlorn with the Magpies unable to offer him Champions League football and potential suitors monitoring his situation.
Pardew had hoped to have Cabaye in his team for Tuesday's trip to Norwich, but that now seems highly unlikely.