McFadden was forced off, just 45 minutes into the derby clash with Aston Villa on Sunday.
Scans have revealed that McFadden has torn a muscle in his thigh.
“It’s a big blow for us because he has been in great form since the start of the season,” said Blues boss Alex McLeish.
“I’m not going to put any targets on his return. He will be back when he’s back, but we have lost him for the foreseeable future.”