O'Neill has identified the England Under-21 player as one of the brightest young players outside of the Premier League.
And an official approach for the 19-year-old player is imminent according to sources close to Villa.
Delph, a left-sided player, has been linked previously with possible moves to Arsenal and Newcastle.
But Villa are poised to firm up their interest in Delph who was voted the Football League Young Player Of The Year for last season.
He began his career as a youngster at Bradford, who will receive a sell-on, before moving to Leeds in 2001 and last September signed a new four-year contract.
Delph played for England Under-19s and made his Under-21 debut as a substitute against the Czech republic last November.
And Villa regard him as a player who could step straight into the challenges of top-flight football rather than as a long term prospect.
If Villa land his signature, Delph would provide another option on the left to the versatile Ashley Young.
Villa reported back for pre-season training today with O'Neill also looking to sign a defensive replacement for retired skipper Martin Laursen.
He has also been linked with a move for the Middlesbrough duo of winger Stewart Downing and striker Tuncay but no official bid has been made by Villa.