He is the second Blues player to join the Imps, after midfielder Charlee Adams made the switch to Sincil Bank at the end of last month.
Lincoln’s first-team keeper Paul Farman picked-up a knee injury last weekend during their 4-3 win against Hyde FC, hence their need to bring in a replacement stopper.
Nineteen-year-old Townsend has been on the substitutes' bench for Blues several times, but has yet to make his senior bow.
A product of Blues’ Academy, he signed for Blues at the age of 12. This will be his second spell out on loan, following a month at Oxford City last season, where he made five appearances.
The Imps are currently in 16th place in the table, some 11 points off a play-off spot.
Townsend could make his debut for Lincoln this coming Saturday when they host Kidderminster Harriers at Sincil Bank.