With Declan Rice joining Arsenal, David Moyes wants to bring in two midfielders to bolster their squad in the ongoing transfer window.
Palhinha has been a top target following a solid first season at Fulham and the Hammers have been trying to sign him.
However, West Ham are not optimistic about signing him after Fulham rejected their opening offer for the midfielder.
And it has been claimed that the Hammers will not be going back with another offer for the 28-year-old midfielder.
With Fulham demanding £80m for the Portugal international, the Hammers have decided against continuing their pursuit of Palhinha.
The east London club will now look at other targets in order to fill the hole left by Rice’s departure to Arsenal.
They are expected to table a bid for Ajax’s Edson Alvarez and have also been looking at James Ward-Prowse and Bristol City’s Alex Scott.