The 29-year-old defensive midfielder, who was sent off in his country's opening 3-0 World Cup defeat to France last month, is entering the final year of his contract at the Britannia Stadium.
The former Tottenham and Wigan player was used mainly from the bench last season and Stoke manager Mark Hughes has increased his midfield options in recent weeks by bringing in Steve Sidwell from Fulham.
Palacios, who has started just 14 games for the Potters since joining them in 2011, flew to Qatar last week for contract talks and the medical but he will now have to return to Stoke ahead of the new Premier League campaign.
I am amazed that clubs havent come flocking for him after he covered himself in glory in Brazil. Will someone please come and get him?- magicfuller