Saunders quickly emerged as the favourite for the job following Wolves' decision to sack Stale Solbakken last night in the wake of their FA Cup third-round exit to non-league Luton.
In a statement on Sunday morning, Doncaster said they hoped to retain Saunders but would not stand in the way of the former Wales international.
"Doncaster Rovers can confirm that they received an official approach from Wolves this morning to speak to Dean Saunders regarding their vacant position," the statement said.
"The Rovers board will not stand in the way of Dean but will try to keep him at Rovers. Dean has been given permission to speak to Wolves and he is meeting them today.
"The board have a strategy for a situation such as this and have a 'Plan B' in place. We will keep everyone updated as we find out more."