Sakho has helped Palace to consecutive clean sheets in his first two appearances for the club and Allardyce has been impressed by the 27-year-old's impact, as well as that of fellow new arrivals Luka Milivojevic and Patrick van Aanholt.
But he fears it will be difficult to retain Sakho beyond this season, even if 17th-placed Palace can avoid the drop.
"It would be a big negotiation at the end of the season if we were to stay in the Premier League," he said ahead of Saturday's home game against Watford.
"At this moment in time Mama has chosen crystal Palace to play first-team football, I think he has settled into the environment exceptionally well.
"He has worked extremely hard at getting himself fitter because he had not played a competitive game all season and he has shown what a good defender he is, and his capabilities on the ball - in possession he has been exceptionally good.
"I think two people on this front, Luka and Mama have given us more defensive resilience.
"We are more defensive in terms of the capabilities of looking after the opposition's attacking forces have been improved by those two players and Patrick.
"We have found that we are more difficult to score against which has been one of my first aims, my first targets ever since I first came here.
"Once we began to do that we began to win football matches and three wins out of five have all come because we can keep clean sheets so the basis of our defensive unit has grown and got better and that has been a good way forward for us to get out of the trouble we are in.
"Mama has played a big part in that, as have Luka and Patrick, and the whole team as a whole are defending better."