The 31-year-old caught Diego Simeone’s eye during the Foxes Champions League campaign during 2016-17 and is considered a good short-term replacement for Barcelona-bound Antoine Griezmann, 27.
Leicester are keen to hold onto the talismanic striker and want to open discussions over a new deal even though his current contract has two years still to run.
Atletico are understood to be weighing up a £20m move with Simeone considering Vardy to be the ideal strike partner for former Chelsea man Diego Costa.
For the Foxes, it’s a tempting deal to make on a player they signed for £1m from Fleetwood Town six years ago. Since then, he has scored 89 goals in 234 appearances for Leicester, including 24 during the title-winning 2015-16 season.
Despite a slow start to last season, he managed 23 goals as the Foxes climbed into the top half of the table.
It’s been a good week for Vardy. News of Atletico’s interest comes as the striker was included in Gareth Southgate’s squad for this summer’s World Cup. A move to La Liga may be sealed with good displays for his country in Russia.