The 25-year-old has continually been linked with the Gunners throughout the January transfer window, and the Hammers boss has admitted "confusion" surrounds the player's future
As exclusively revealed by Goal.com last week, the Gunners are preparing to make the former Wigan man their first signing of the transfer window, whilst north London rivals Tottenham have also shown interest in the 25-year-old.
And, despite rejecting claims Diame would switch to the Emirates Stadium earlier in the month, Allardyce has since admitted "confusion" surrounds the player's future, fueling suspicisions he could exit Upton Park in the final three days of the transfer window.
Speaking to reporters, the ex-Bolton boss said: "It is total confusion. I'm as confused as anyone. We might lose him. I hope we don't."