Ange Postecoglou, Tottenham's Australian boss, had suggested his club could be poised for a late swoop to strengthen his squad having said "the club is still looking for opportunities".
Spurs entered talks with the 19-year-old last week after an agreement with Bayern had been struck for a deal in the region of $101m (£50.2m).
However, negotiations stalled on Friday with Premier League rivals Arsenal, Chelsea and Manchester United also reportedly interested in the France international.
He is now set to link up with Tottenham, although the exact structure of the deal is still to be finalised.
Tel's U-turn represents a further boost for Postecoglou, who has faced mounting external pressure but watched his depleted team make it three wins from their last four matches with a 2-0 victory over Brentford on Sunday.
The addition of centre-back Kevin Danso from Lens was also confirmed on Sunday as Tottenham look to salvage their campaign, with the prospect of trophy success still possible due to participation in the Carabao Cup, Europa League and FA Cup.
Spurs face a crucial week with a trip to Liverpool on Thursday to determine who qualifies for next month's Carabao Cup final at Wembley.
An FA Cup fourth round tie with Aston Villa follows three days later and Postecoglou could have Tel available for both fixtures if he receives international clearance and a work permit in time.
Aston Villa's Ollie Watkins could make a transfer deadline day move to title-chasing Arsenal. (EPA PHOTO)
Meanwhile Arsenal, who had no problem scoring goals against champions Manchester City on Sunday in a stunning 5-1 rout, could still be in the market for a striker.
The Gunners' desire to add to their firepower has been one of the main stories throughout January and they could make a fresh bid for England striker Ollie Watkins after Aston Villa completed a loan deal for Marcus Rashford on Sunday night.
It is being reported that Villa have agreed to cover at least 75 per cent of Rashford's estimated $602,000 (£300,000) weekly wage and that figure could rise to 90 per cent depending on performances. Villa have also secured an option to buy in the summer.
Rashford will play for Villa for the remainder of the season after making a loan switch from Manchester United.
The 27-year-old had fallen out of favour at Old Trafford since new manager Ruben Amorim took charge in November and not played any first-team football since December 12.
Villa have signed Spanish attacking midfielder Marco Asensio on loan from Paris St Germain until the end of the season, and Arsenal could take that as a cue to go in again for Watkins, having already seen one bid rejected for the 29-year-old earlier in the week.
Another striker who completed a move on Monday was Brighton's Evan Ferguson, who has teamed back up with former Brighton boss Graham Potter, on loan at West Ham until the end of the season.
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