Butler, the former Walsall defender, emerged as manager Nigel Clough’s preferred option to bolster a back four which kept 17 clean sheets in League One competition last term after announcing he is parting company with Dean Smith’s side.
But United’s hierarchy insist their interest in Butler should not be interpreted as an admission they have resigned themselves to losing fellow centre-half Harry Maguire after Wolverhampton Wanderers tabled an improved £1.5m bid for his services earlier this week.
Clough, who has argued publicly that Maguire’s career would be best served by remaining in South Yorkshire for at least further 12 months, endorsed the decision to offer the club’s reigning player of the year a new contract at the end of the previous campaign.
Although Maguire and his representative have so far remained silent on the issue, the release of Matt Hill, rather than Wolves’ emergence as potential suitors, triggered United’s negotiations with Butler.
Walsall had hoped the 30-year-old, who has made over a century of league appearances since arriving from Huddersfield Town in 2010, would activate a clause tieing him to the Bescot Stadium for another season when his deal expired earlier this summer.
However, after growing tired of commuting from his home near Doncaster, Butler told Smith he would instead be seeking a new challenge elsewhere.
With Butler expected to be officially unveiled as a United player shortly, Clough will redouble his efforts to recruit a new centre-forward following the arrival of Marc McNulty and Jamal Campbell-Ryce from Livingston and Notts County respectively.
Wolves, who lured Kevin McDonald away from United in August, are likely to make a third approach having also seen a package worth £1m rebuffed by Bramall Lane’s hierarchy.
Butler started his career with Scunthorpe before joining Town via a loan spell at Grimsby Town.
He helped Blackpool secure promotion to the Premier League after moving to Bloomfield Road on a temporary basis in 2010.