England go into the fourth match of their campaign at Twickenham with a 100 per cent record and seeking a first Grand Slam since 2003.
"Owen is making good progress and he's 50-50 for the Italy game," said Lancaster of the playmaker's thigh injury.
"In the next week he'll be running, but the problem will be kicking. If there's a doubt we won't risk it."
Farrell, son of assistant coach Andy Farrell, picked up the injury while booting downfield during last weekend's 23-13 win over France.
The place kicker has been instrumental in the wins over Scotland, Ireland and France.
Lancaster added that Alex Corbisiero, Jonathan Joseph, Tom Croft, Calum Clark and Tom Johnson will not be fit to play either on Sunday or the final match against Wales in Cardiff.