Parker has been linked with a transfer ever since the Hammers were sent down last season but, despite being open to such a move, he has started the season under Allardyce in the Championship.
Top-flight newcomers QPR have seen a £4million bid turned down for the 30-year-old midfielder and Allardyce believes both Parker and England could be better served by the player remaing at Upton Park.
He told The Sun: "Scott has expressed an opinion that he wants to get back into the Premier League and play Premier League football. That's come from someone in the England camp telling him that's where he needs to be. I don't see the logic behind that.
"Just because a player drops down a division, it doesn't mean he's turned into a bad player overnight and isn't good enough for England.
"It could actually benefit England if Scott is playing at a club which is winning more games than when he was playing for West Ham at the bottom of the Premier League.
"The England team shouldn't be picked on whichever players are in the Premier League when you've got a Premier League player playing in the Championship."