The Norwegian’s current contract is set to expire in the summer.
The 28-year-old, who joined Blackburn from Tromso six years ago, has impressed for Rovers recently.
Allardyce said: “Morten has a deal on the table and his representatives will be over, no doubt, to finalise that deal with the chairman in the next few days or weeks.
“We certainly hope he does agree terms and signs on for the next few years.”
