The Whites, who were relegated from the Premier League at the end of last season, are still in the process of appointing a successor to Sam Allardyce, who left at the end of last season.
The club hierarchy, consisting of 49ers president Paraag Marathe and Leeds CEO Angus Kinnear, have been conducting interviews in order to come to a conclusion.
Talks have been held with the likes of Scott Parker and Patrick Vieira, but Farke is now the clear favourite.
And they are now discussing the terms of a contract with Farke in a clear indication that they want to hand him the job at Elland Road.
Leeds are keen for their new manager to have experience of managing in the Championship and ex-Norwich boss Farke fits the bill.
The club have already assured all their interviewees about having a firm say in recruiting players in the summer.
They will play their first match of the new Championship season at Elland Road on 6th August against Cardiff City.
