The Knicks and Nets, failing in their battle to dominate the Atlantic Division, are now in a struggle to land Toronto point guard Kyle Lowry, who is being shopped around the league.

According to sources, both clubs are in the mix, though the Knicks’ talks stalled Thursday when the Raptors insisted on either Tim Hardaway Jr. or Iman Shumpert to be added to the deal instead of Metta World Peace.

According to sources, Lowry’s New Jersey-based agency is trying to steer him to the Knicks and what better way to motivate team owner James Dolan than to get the Nets involved.

If the Knicks do land Lowry, starting point guard Raymond Felton will be on the way out as the mandatory piece in any deal. He is out two-to-three weeks with his latest hamstring strain.

The Knicks are worried Felton may never regain his form from last season because of the lingering hamstring woes. Felton, who missed four games last month with a pinched nerve/hamstring, reinjured it in Cleveland.

It set in motion the Knicks’ discussions with the Raptors over a deal for Lowry, with Toronto in fire-sale mode.

While an NBA source said the teams had “strong conversations’’ Thursday, things are on hold. Dolan believes Toronto’s asking price is too high but they do not consider the talks as dead.

The Knicks thought they had a potential for a deal in an offer of Felton, World Peace’s contract and a 2018 first-round pick, but the Raptors wanted Hardaway to replace World Peace. The Knicks feel they got a steal in Hardaway at No. 24 in the draft.

One source said Friday morning: “The terms were altered despite an explicit understanding.’’

Any deal couldn’t be consummated until Sunday when World Peace and Hardaway become eligible to be traded under league bylaws.

Yahoo! Sports reported Thursday Dolan appears worried about giving up too much to the Raptors general manager Masai Ujiri, who netted a lot of pawns in the Carmelo Anthony deal in 2011 when he worked for Denver.