The striker was released in June but injury concerns saw the Hammers bring him back for cover and after scoring three times in 10 games the manager wants to extend his stay
After releasing the 30-year-old at the end of his contract in June, Allardyce moved to bring Cole back to Upton Park in October amid a striker shortage and he has since scored three times in 10 Premier League games.
Andy Carroll is expected to make his long-awaited return from a foot injury in January but, with Cole's current deal also likely to end this month, Allarydyce wants to keep his options open.
"We've got that in mind and are talking about that as quickly as we possibly can because obviously it needs to be addressed," Allardyce told reporters.
"Carlton will be dealt with very shortly."
If Cole opts not to extend his stay at Upton Park, QPR could be a potential suitor with manager Harry Redknapp recently revealing an interest in the forward.