Diarra has only made two Premier League appearances since moving to Upton Park in the summer from Marseille and has since voiced his desire to leave, citing "lies" made to him upon his arrival in east London.
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"He is obviously clear, without telling me, that he is not happy with the situation, which is understandable," Allardyce told reporters.
"You get this all the time as a manager when you bring a player of his experience and calibre over from France.
"It hasn't quite worked out and he feels a little disgruntled in terms of playing more, this or that."
But Allardyce insists he is looking to keep Diarra at the club, particularly with speculation rising over the future of fellow midfield man Mohamed Diame.
"It is a fact of life," he added. "I look at the situation and play what I consider the best team, and because of Alou's long-standing injury he has found it hard to adjust to what is needed in the Premier League.
"If he is unhappy, he just has to tell me what he wants to do and we'll see how we go from there. We'll have that discussion and we'll make a decision after that on his future."