It is also reporting that ex-Arsenal player Tony Adams would be brought in to work on football matters should the takeover be successful.
Villa owner Randy Lerner (pic) put the Birmingham-based club up for sale last May.
Sky News, which is understood to have broken the story, is suggesting that Adams has approached city investors to get backing for the deal.
It claims that Adams and Smith - formerly a director of global sport and media business IMG as well as Chelsea - are working together on the takeover proposal.
It says the pair have a firm called Halo which would be used to purchase the club.
It has been suggested that Smith and Adams have approached a number of private equity and other investment firms in recent weeks in an effort to raise approximately £75m in new equity to finance an offer for Villa.
Reports suggest the remainder of the funding for a takeover would probably be in the form of new debt.
This is the latest in a number of stories suggesting that Villa are about to be taken over by one consortium or another but the club's chief executive Tom Fox said recently that no takeover deal was imminent.
Villa still need points at the foot of the table to stay in the Premier League but they face Arsenal in this months FA Cup Final whatever their league fate.