The midfielder signed a pre-contract deal to move to White Hart Lane in the summer, but Andre Villas-Boas is keen to bring in the 22-year-old in the January transfer window with Sandro out for the rest of the season.
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However, despite making an offer to bring in the highly-rated Germany international early to cement their hopes of a top-four finish and Champions League qualification, the Bundesliga club have rejected Spurs' proposal.
"There is a request from Tottenham. The offer is not acceptable," Schalke general manager Horst Heldt told reporters.
"But the transfer window is still open. Lewis has not become cheaper today."
Holtby played a starring role as Schalke returned to Bundesliga action after the winter break with a 5-4 win over Hannover on Friday.
Speaking after the game, the midfielder was non-committal regarding his future, insisting he was simply concentrating on Schalke currently.
"I will give all for Schalke until the last second," Holtby told reporters.
"Everything else must be decided by the responsibles of the club."