The former France international is currently a free agent after being released by Russian side Lokomotiv Moscow and was in Scotland for talks with the Hoops on Friday.
But a deal is being held up by his registration rights, which have not yet been released by his old club.
This has left the door ajar for Newcastle, who are ready to offer him a route back to the Premier League.
Diarra spent some of his early career with Arsenal and Chelsea, but he rose to prominence at Portsmouth before joining Real Madrid in a big money deal.
The 29-year-old wants a short-term contract as he looks to engineer a move back to a top level European club, and Newcastle are prepared to take a gamble by presenting him with a deal which will run until the end of the campaign.
Diarra could be used as a replacement for Cheick Tiote, who is wanted by Napoli.