The Spaniard's existing deal is due to expire on June 30 and while there is a new offer on the table, Press Association Sport understands there is still a distance between the two parties.
A report on Tuesday suggested Dalian Yifang have attempted to lure Benitez away from English football with a £12 million-a-year deal to manage in the Chinese Super League, effectively doubling his money.
However, the 59-year-old has been linked with a move to China for more than a year and while he prides himself on honouring contracts, he has made it clear in the recent past that he sees his future in Europe, and ideally in the Premier League.
What is not in any doubt is that the Magpies' hierarchy are sailing close to the wind if they are to keep the man who guided the club back into the top flight and has kept them there for the last two seasons.
They want Benitez to stay and believe they have made him a lucrative offer, while he wants to carry on but only if he has greater control of the recruitment process. That would include freedom to sign the players he wants regardless of their age or potential resale value.
The current impasse, which has been ongoing for several weeks despite regular conversations with owner Mike Ashley, has left fans fearing the worst and managing director Lee Charnley has little time in which to find a way forward before the former Liverpool and Real Madrid boss becomes a free agent.
His task is being complicated by the prospect of Ashley selling the club with discussions under way with a series of potential purchasers, principally Dubai-based billionaire Sheikh Khaled Bin Zayed Al Nahyan, who claimed last month to have "agreed terms" with the Sports Direct magnate.
Sources in the United Arab Emirates insist Sheikh Khaled's interest in the club is progressing, but no group has yet been granted exclusivity and it appears a conclusion remains some way off.
If Benitez, perhaps understandably in the circumstances, is keeping his powder dry to see what a new owner may have to say, he may have to remain patient for some time yet.
Ashley, however, is a man for whom patience is rarely a virtue - he famously called time on Amanda Staveley's attempt to buy the club after weeks of fruitless anticipation - and it remains to be seen how long he will allow the current situation to persist.
In the meantime, a significant proportion of a truncated summer transfer window has elapsed without tangible progress, with the manager's future unresolved and the players due back for pre-season training early next month.