The former Mali international arrives at the Cottagers with a wealth of experience, having won four Ligue 1 titles with Lyon and two La Liga titles with the Spanish giants
The 30-year-old, who has 74 caps for Mali, will sign upon securing a working visa.
The defensive midfielder has been a free agent since leaving Monaco in the summer following their relegation from Ligue 1.
Diarra started his career at OFI Crete and Vitesse Arnhem, going on to make his name as a committed and tough-tackling midfielder alongside Michael Essien at Lyon.
He made 172 appearances for the French side and won four consecutive league titles from 2003 to 2006.
Fabio Capello then signed him for Real Madrid in 2006 for a reported fee of £22 million and the player was a key part of their La Liga-winning sides in 2007 and 2008.
He made a total of 122 appearances for the club until leaving in January 2011 to sign for Monaco.
How do you stay up to date with football when on the move? With http://m.goal.com – your best source for mobile coverage of the beautiful game.