Club president Unal Aysal will let the 59-year-old combine the national team job with his domestic duties before taking on an advisory role with the Turkish Football Federation
Former national team boss Abdullah Avci left his post earlier this week following a poor run of form, prompting immediate speculation that the Turkish Football Federation would turn to the former AC Milan coach.
And Aysal has said that his club will allow Terim to take charge of his country until May 2014 in conjunction with his duties at the Turk Telekom Arena before stepping into an advisory role with the TFF.
"We're ready to help the national team and Turkish football," a statement from Aysal read.
"But we also have plans for the future and we need our coach. Terim can coach the national team until the end of May, then he would work as an advisor for the national team and the TFF for another year."
Terim's current contract with Galatasaray expires at the end of the current campaign.
The 59-year-old has previously coached Turkey twice, helping them qualify for the European Championship for the first time in 1996 and leading them to the semi-finals of the 2008 edition of the tournament.
Turkey's next game is a World Cup qualifier against Andorra at home.