R's boss Harry Redknapp is desperate to strengthen his defence in their battle against relegation from the Premier League and is understood to have made an approach for the Sweden international.
The 29-year-old, who agreed a new four-year deal at The Hawthorns in October, has a £4million buy-out clause in his contract which kicks in this summer but Rangers were keeen to get him on board now.
However, the Baggies have turned down the offer from their Premier League rivals as they regard Olsson as a key member of their squad.
Redknapp has also been linked with a move for Tottenham defender William Gallas.
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