The Gunners have identified the Frenchman as one of a number of transfer targets, and made a £10 million bid for the midfielder.
But Newcastle snubbed the offer, with Pardew going on to describe the timing of the bid as "direspectful".
| WENGER LAMENTS TRANSFER WINDOW
|15/8||Yohan Cabaye is 15/8 with Paddy Power to stay at Newcastle this summer
"He either stays or he goes," Pardew told reporters. "The bottom line with a world class player is he has to go for world-class money."
Pardew also indicated Cabaye has been left out of the squad to face Morecambe in the Capital One Cup on Wednesday.
He added: "He either stays or he goes but he will not play tomorrow that’s for sure.
"The answer to this is not simple. He is either going to be sold and we have to replace him in the window we have left or he will stay.
"As the manager of Newcastle United I have to protect him but the first thing I have to protect is club, and trust me that is first on the agenda while I am here."
The France international is yet to play a competitive game for the club this season, having also been excluded for clashes with Manchester City and West Ham.