"All I can say at the moment is we're having positive talks, on going with Tim," Gallop was quoted as saying on the A-League website on Thursday.
"I met with his manager yesterday and spoke to Tim last night. It's not appropriate to say more than there are positive talks ongoing.
"And I've said before, we'd love to have Tim playing in the A-League, I believe it's the right time in his career."
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Newly appointed head of the Australian League, Greg O'Rourke said that the 36-year-old's return to his native country would help grow the sport in the country.
"If you're bringing back the Tim Cahills of the world, they can really make a difference in the marketing of this league," he said.
Cahill, who signed for Hangzhou in February, had been offered a contract extension until 2018 by the Chinese club but had turned down the offer, according to reports.
(Reporting by Nivedita Shankar in Bengaluru)
