There had initially been fears that the striker's €214,000-per-week wages would scupper a deal, with the Rossoneriunable to match his current earnings.
But both clubs are working hard on an agreement with the player to smooth his passage to San Siro, with reports on Wednesday suggesting the Blues will pay up the remainder of the Spaniard's contract.
Milan CEO Adriano Galliani confirmed his club's interest in the striker on Wednesday, but also said they could move for another striker if needed.
Torres moved to Stamford Bridge for a then British transfer record €63 million from Liverpool in 2011, but has struggled to regain the form he had displayed in his four years at Anfield.
He has scored just 20 Premier League goals in 110 appearances with the Blues, compared to the 65 he bagged in 102 matches during his time on Merseyside.
Chelsea have signed Diego Costa and brought back Didier Drogba during the current transfer window, knocking Torres down to third place in the pecking order.
The 30-year-old had been linked with a return to Atletico Madrid earlier in the summer, while Serie A side Inter had also displayed an interest.
But he is now nearing an agreement to join their city rivals and bring to an end his mixed seven-year spell in English football.
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