The 20-year-old is currently enjoying a three-month spell at Bramall Lane and made his first real contribution in Tuesday night's 1-1 draw with Leicester when he cracked in a stunning 25-yard equaliser. And Blackwell has now challenged Treacy to put in the performances up until the turn of the year.
"The option is there (to extend the deal), it is clear that he is lacking match fitness," Blackwell said. "He hasn't played a lot of football at first-team level."
"We will look at the long-term and if he does well between now and Christmas to possibly extend it."
Meanwhile, Blackwell has revealed he has a host of players on trial with the Blades as he continues his drive to strengthen the squad.
"I have got two Spanish lads, a Nigerian and I've got Jonathan Fortune and (Mark) Fotheringham. They're the ones that are here trialling."