The 26-year-old had been the subject of a £1m offer from Crystal Palace during last month's transfer window, which was subsequently rejected by Wolves.
Having spurned that bid, Saunders has admitted that he would now like the 26-year-old to commit his future to the club.
"We're talking about [a new deal] now. We were just waiting for the window to shut and for things to calm down a bit and now we'll crack on. I think he wants to stay and sign, it's just down to agreeing the figures," he told the Express & Star. "We've got to reach an agreement somewhere.
"He's always got the option of letting his contract run out which puts him in a position where no-one has to pay a transfer fee for him, so he can command more money out of the whole package.
"But my plan was to turn down the money offered and give him a new contract and he bangs goals in for us for the next three years."
Ebanks-Blake has scored 11 goals so far his season.