The 20-year-old midfielder will see an initial short-term agreement come to an end after important fixtures against Derby County and Nottingham Forest.
Ipswich are hoping they can keep the Wales international past that point, with the issue set to be addressed before Thursday's loan deadline.
Williams sees no reason why he should not stay on at Portman Road, with it unlikely that he will see much first team action if he re-joins a Premier League survival scrap at Selhurst Park.
He said told the Green Un in the wake of Saturday's 2-0 victory over Brighton & Hove Albion: "It's been a hard season for me, if I'm honest, and today I felt good again. I felt part of something and part of a team again.
"If Palace aren't going to play me in the first team, then I'd be happy to stay here and play.
"It's good to get out to a great club, full of great players and a great manager. I've enjoyed my time here so far and hopefully that can continue.
"These next two games are huge and will probably decide whether we're in the top six or not. If we can get points from those it will be an exciting finish. It would be nice to be part of that."
Williams is particularly enjoying working as part of a tight-knit group Mick McCarthy has pieced together at Ipswich.
He said of his new boss: "He's been fantastic. I'd only seen him on TV before I came here so I didn't know how he was going to be, but he's been first class.
"I think he's a great manager and he's been fantastic with me. He's eased me in and I feel part of something really special."