The Ligue 1 side has suspended the midfielder, whose contract expires in the summer due to an ongoing dispute, with the Magpies thought to be leading the race to sign him.
The midfielder will miss the club's Coupe de France tie against PSG after club chairman Olivier Sadran punished the 23-year-old, whose contract is set to expire in the summer.
Toulouse coach Alain Casanova has backed his chairman's decision, although he conceded his absence will be a loss to the side.
"The whole club shows full solidarity to that chairman's decision," he told L'Equipe. "It is really a shame a player educated at the club could leave as free agent. His absence is big loss for the team, but that decision is logical."
Sissoko has been a regular in the Toulouse side in recent seasons, and has made five appearances for France.
Newcastle has tied up deals for Massadio Haidara and Mapou Yanga-Mbiwa in recent days, and is set to seal a move for Yoann Gouffran soon after the player revealed on Twitter that he would be joining the Premier League side.