Holloway approached his Foxes counterpart Nigel Pearson about a potential move and was given permission to talk to the 27-year-old, who netted nine times while on loan with the Seasiders last term.
And Holloway is keen to tie a deal up for Campbell as he tries to ease the club's injury problems, with forwards Daniel Nardiello and Ben Burgess on the treatment table, although he admits wages could be an issue.
"I had a chat with DJ's manager (Leicester boss Nigel Pearson) which I thought was fantastic. He told me I could talk to DJ, which is really unusual, so I did," Holloway told the Gazette.
"I've left my chairman talking to them. It started off as a loan, then it moved to a permanent. We'll see what happens but it's not in our hands because of his wages.
"Unless he decides to come down to where we are, it is probably going to make it a non-starter.Whether we can dream of sorting that I don't know, but we'll give it our best shot."
If a deal for the striker can be agreed, he will join Jay Emmanuel-Thomas, who arrived at Bloomfield Road from Arsenal on a one-month loan deal on Monday.