Williams is currently a week away from completing a third and final month on loan with his former club and Fry is keen to sign the player on a permanent deal.
The former Blues boss told his clubs official website on Thursday afternoon: "I have been trying to negotiate with Birmingham City all day about getting Tom Williams back permanently when his loan deal expires.
"Tommy has two-and-a-quarter years left on his contract, so we are a distance away.
"Birmingham have been very helpful, but we will just have to see, there are a few days left for us to work on that one."
Williams has played in just four games for Blues since joining the club from Barry Fry's side in March 2002 and spent the whole of last season and the early part of this season on loan at second division QPR.