Madrid have been linked with Gareth Bale for several months but it is now apparent that Walker has also been on their radar.
According to The People, Madrid have been monitoring Walker since his impressive performance against Spain at the Under-21 championships in 2011.
The Spanish giants are ready to replace Alvaro Arbeloa and the 22-year-old England international will remain a target even if coach Jose Mourinho leaves the club in the summer.
The report suggests that Spurs chairman Daniel Levy will demand at least £15m for Walker, who signed a five-year deal only last season.
It is believed that Madrid scouts have been at many Spurs games this season looking at Bale, but will go for Walker instead after realising that the Welshman plans to spend another season at White Hart Lane.