"You don't want to lose your best players. Jimmy has a year and a half left on his contract and I hope he stays," said Hodgson.
"But I have to be realistic in that if a top player is in form and doing well then he will be coveted by the other clubs. I can't give stonewall guarantee that we'll be able to hold onto him."
"I hope we can, but we'll have to wait and see what happens in the transfer window.
"I suppose the fact he's getting international recognition has forced the contract talks along. In the beginning he was asked to show some patience and wait until the end of this year.
"Negotiations have opened up and it's an ongoing process. I'm sure that we'll see a solution in the near future but I don't want to be put on the spot over the timeframe."
Hodgson believes Bullard, a £2.5million signing from Wigan in April 2006, has developed into a more complete midfielder over the past year.
"I'd like to think Jimmy is a better player now," the former Inter Milan boss said.
"He puts in a lot more for the team in trying to defend and get into the right positions than maybe he did when he returned from his injury.
"His skill on the ball, passing ability, desire and energy levels have remained constant throughout but in my opinion he's improved defensively."