Scunthorpe are searching for a new manager following the sacking of Brian Laws on Wednesday just 24 hours after the FA Cup defeat to Grimsby Town.
Laws, who was in his third spell in charge of Scunthorpe, was axed with the side sitting in 12th spot in League Two after failing to win any of their last five games.
A number of names are thought to be on Scunthorpe's wanted list, but Lillis is believed to be towards the top.
Lillis is well thought of at Scunthorpe having enjoyed spells as a player and assistant manager at Glanford Park during his career.
The 53-year-old is highly-regarded within coaching circles after enjoying great success with Huddersfield's Academy and he has also stepped in as caretaker manager twice at the John Smith's Stadium during the last two years.