The 20-year-old joined Chris Hughton's team in February in what was his eighth loan move away from White Hart Lane.
Birmingham are currently fourth in the Championship table and are almost guaranteed a place in the play-offs.
Townsend is hopeful that he can impress enough in the promotion chasers' end-of-season run-in to persuade Blues bosses to make their move for his signature.
He told The Sun: "Birmingham are a massive club and I'd be foolish not to consider it if something comes along.
"I am just looking to play as well as I can and maybe force a decision from other people.
"I've been on loan a few times but this is different. When the Birmingham opportunity came, I couldn't turn it down. I have never been involved in a promotion push and I'm loving it."
Although he has yet to represent Spurs in the Premier League, Townsend has two Tottenham goals to his name including a strike in the 4-0 win over Shamrock Rovers in the Europa League.