Walters has not played for Burnley or the Republic since 2 September.
It had been thought that Walters was certain to miss Ireland's World Cup play-off fixtures.
Burnley boss Sean Dyche said ahead of the October 1 victory at Everton: "Jon won't make it as we are still letting his knee calm down. I've said all along it's not going to be days, it's going to be weeks and we're hoping for it to settle down quickly". It's a historical injury, a wear-and-tear injury and needed time to calm down.
"The knee has flared up and there is a settling down period for that type of injury, so we are unsure on timescales".
However, he has not ruled out captain Seamus Coleman, who has been out of action due to a double leg-break sustained in Ireland's scoreless draw against Wales last March.
Stand-in captain David Meyler is suspended for the first leg.