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Davies' current deal with the Premier League club expires in the summer and he has not started a game for the Trotters since 17 December.
However, the 34-year-old is expected to feature against Macclesfield Town in Bolton's FA Cup third round tie at Moss Rose on Saturday, and his manager wants him to give his best against the League Two outfit.
"Kevin will be the first to tell you that he's desperate to play at the level he is capable of - the level that got him into the England team," Coyle is quoted as saying in the Daily Express.
"Every player, no matter what their age or situation, it's up to them if they want to be at Bolton to go and earn that contract.
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"The players will know it's up to them to go and show what they can do."
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