The 26-year-old still has one year remaining on his current deal at Ewood Park, but Rovers owners Venky's are keen to rebalance squad finances by offloading players following their relegation to League One at the weekend.
Wolves are thought to be in the market for competition for first-choice stopper Carl Ikeme this summer, having been forced to call upon the previously-untested youngster Harry Burgoyne at several points this season.
Steele's current salary of £6,000 a week would be no problem for Paul Lambert's side, who are backed by wealthy Chinese firm Fosun, although the reported transfer offer of £3m is significantly higher than the £950,000 Rovers paid to acquire him from Middlesbrough three years ago.
Lambert has previously indicated that he is aiming to bring in several new faces this summer at the same time as trimming his 30-plus squad down to around 23 players.
The ex-Blackburn boss previously turned to his old club in the January transfer window, when he brought wantaway winger Ben Marshall to Molineux in a £1.2m deal.
Steele was a virtual ever-present over the course of Rovers' final Championship campaign with 41 league appearances, although he was relegated to the bench for the final three games as Tony Mowbray's men made an unsuccessful last-minute bid to beat the drop.