Tottenham's chances of reaching the quarter-finals were dealt a heavy blow last week as they were beaten 3-1 at White Hart Lane.
Despite their first-leg deficit, Townsend has suggested that he and his teammates will play an attacking style of football at the Estadio da Luz as they attempt to make it into the next round.
"We've nothing to lose," he told the club's official website. "We're two goals behind from the home leg, so we can go there, have a go and see what happens."
Spurs head into the match having lost 1-0 at home to Arsenal in the Premier League on Sunday.