West Ham tonight confirmed they have agreed a deal that, based on a certain number of appearances, would see the four-times capped James move to East London for a fee of £3.5 million.
Talks with James, who will be 31 on August 1, are currently progressing and new Hammers' boss Glenn Roeder hopes to unveil the former Liverpool and Watford No.1 as his second summer signing later tomorrow, following the recent capture of Sebastien Schemmel for £465,000.
MD Paul Aldridge told the official website: 'David has indicated that he wants to come to West Ham, we're continuing talks with him and it's looking very positive.
'I'm hopeful that everything will be satisfactorily concluded with David early tomorrow.'
James represented his country three times last season. His most recent cap was against Mexico in the friendly at Derby in May, when he came on as a substitute for Nigel Martyn at half-time, along with senior England debutants Joe Cole and Michael Carrick.
Hammers favourite John Hartson has been linked with a possible return to Upton Park, where he spent two seasons before his £7.5m transfer to Wimbledon in January 1999.
The Welsh international striker, who has been battling to overcome a knee problem, is anxious to stay in the Premiership despite Coventry City's relegation in May. Leicester City and Celtic have also been linked with the 26-year-old - but he is very unlikely to be seen back in a claret and blue shirt.
Aldridge adds: 'John Hartson was one of several potential signings on Glenn's list of possible targets, and John's name did crop up in conversation with Glenn a few weeks ago, but there is no substance in reports that he will be joining us.'