Leeds' new £700k signing will be sidelined for three months following an accidental training-ground clash with Paul Butler.
The former Luton midfielder damaged knee ligaments in his first training session for the club.
The surgeon looking after Nicholls has decided against putting him under the knife for the time being, much to the relief of Kevin Blackwell.
Blackwell told the official Leeds website: "It's good news that Kevin doesn't need an operation right now. These days there is always the risk of complications with surgery, as we found out with Steve Stone last season."