The 27-year-old has been a key member of the squad this season, making a total of 39 appearances, after joining from Southend on a free transfer back in 2000.
"I think Nathan's deal has been as good as agreed," said Taylor. "We are just waiting to get it signed."
Taylor is keen to tie down the experienced Welshman, who impressed after being recalled to the side in their 2-1 win over Bristol City.
Albion only need to take three points against Peterborough at London Road to ensure the club achieve promotion to the First Division.
