The Northern Echo claim the 52-year-old is in the frame to replace Graeme Lee, who was sacked at the end of the season after claiming just one win in 11 games.
Lee had only been in charge since December, when he replaced Dave Challinor after the former AFC Fylde boss opted to drop down a level to rejoin former side Stockport County.
Challinor ended up leading Stockport to the National League title, winning his second promotion in as many seasons having also led Hartlepool back to League Two.
Grayson has bad memories of managing in the North East, having endured a tumultuous spell with Sunderland in 2017 following their relegation from the Premier League.
His stint in the dugout coincided with the first series of the club’s Netflix documentary ‘Sunderland Til I Die’.
Ex-Newcastle United defender Mike Williamson, who has previously managed neighbours Gateshead, is also said to be in the frame.
As for Grayson, he’s been out of work since leaving Fleetwood Town in November of last year, having endured a run of seven defeats in eight games to leave the club 22nd in League One.
Grayson previously enjoyed a lot more success in his first stint in charge at Bloomfield Road, leading the club to promotion to the Championship in 2007.
He left the Fylde coast to join boyhood club Leeds United, before going on to manage Huddersfield Town, Preston North End, Sunderland and Bradford City.
Speaking recently, Grayson hinted that he’s had a job offer from a club abroad.
"The club approached me about this job," Grayson told the Sacked In The Morning Podcast. "But it's not close to home. it is quite far away.
"The club got in touch with me through my agent and then we set up this Zoom call this morning and went through the process of me getting to know them and them getting to know me,” he added.
"It is something I have been looking into. Do I want to broaden my horizons in a different country?"