According to the News of the World, Gunner's chief Arsene Wenger has opted to bring in a short-term solution to his goalkeeping problem this summer, by replacing the mercurial Manuel Almunia with 37-year-old shot-stopper Schwarzer.
With Australia out of World Cup 2010 following their group stage elimination, it is reported that Wenger will push through a deal with the Cottagers in the next couple of weeks.
Losing their experienced No.1 though will see Fulham boss Roy Hodgson opt to sign Green from the Hammers. The England international has just one year left on his contract at Upton Park, and despite his well documented gaffe against the USA at the World Cup, Fulham lead a number of potential suitors for his signature.
Hodgson was one of the main men backing Green and urged England chief Fabio Capello to keep faith with the Hammers' shot-stopper.
Losing Green would leave a big hole in the Hammers' rearguard, and it would appear new manager Avram Grant has his eyes already set on a replacement.
Stoke City's Asmir Begovic and Sunderland 'keeper Marton Fulop have been linked with a move to Upton Park, while Nigeria keeper Vincent Enyeama has also thrown himself into the mix after declaring he expects to leave current club Hapoel Tel Aviv this summer.
Enyeama told reporters: "I expect to hear something new within the next week. It's natural. Everybody wants to get ahead in life so, obviously, I want to move to a different place."