If the 30-year-old actress manages to clinch the deal she would be joining Johnny Depp and Meryl Streep, already confirmed for the roles of the Wolf and the Witch in the film, said the Hollywood Reporter.
Blunt would play the role of the Baker's Wife, a woman placed under a spell of barrenness by her sorceress neighbour (Streep).
The live-action adaptation is being helmed by Rob Marshall.
Jake Gyllenhaal and Chris Pine are also in talks for the role of Cinderella's Prince and Rapunzel's Prince respectively.