The Foxes are in serious relegation trouble and may even get a Premier League points penalty.
Due to PSR, they cannot spend big on transfers, which means they must get creative.
Manager Ruud van Nistelrooy has brought back Cannon, who scored 11 goals in 25 games for Stoke.
“He’s definitely one on the list for us,” van Nistelrooy said at his press conference on Monday.
“We keep a close eye on him like we do with all the boys who are on loan.
“Tom’s situation is closely assessed. There are decisions to be made on that. It’s still a possibility (he stays at Stoke). But we’re looking in this window at his situation, what would be best for him and for the club.”
Stoke issued a statement saying: "Tom has our thanks for his commitment to the Stoke City cause during his loan spell with the club. We wish him well for the future."
Leicester said in a statement: "Striker Tom Cannon has returned to Leicester City after being recalled from his loan spell with Sky Bet Championship side Stoke City.
"The 22-year-old Republic of Ireland international scored 11 times in 25 appearances for the Potters during his time at the Bet 365 Stadium, including four goals in a 6-1 win over Portsmouth."