The 26-year-old, who used to live in Clifton, has fallen further down the pecking order at Maine Road following the arrival of Robbie Fowler from Leeds Utd.
Manager Paul Hart is looking to seal the deal in the next 24 hours but it is thought Huckerby wouldn't join until 24 February so his move would cover the playoff fixtures should Forest secure a top six finish.
Huckerby, who regularly used to watch his mates play sunday league football in Nottingham whilst at Coventry, is believed to be keen on the move which will be partly funded by David Prutton's sale to Southampton for £2.5m on transfer deadline day.
Forest will have competition for his signature from East Midlands rivals Leicester City if they come out of administration. Martin O'Neill's Celtic are also believed to be interested but only in a permanent move at the end of the season.
The pacey forward scored a hattrick against The Reds last season in Manchester City's 3-0 win at Maine Road.