The 31-year-old joined the Magpies in August 2016 after agreeing to a three-year contract which expires at the end of the season. He will have a chance to secure a new deal provided he reaches a certain amount of appearances this term.
The midfielder has made 91 appearances since teaming up with the side and under manager Rafael Benitez, he has been a consistent fixture for the Magpies this term featuring in all their league games.
And the former Hull City player is looking forward to a new deal that will keep him at St James' Park beyond the end of the 2018-19 season.
"It's very nice for me at Newcastle and I am happy here,” Diame told Chronicle Live.
"Everyone knows I am near the end of my contract. But I am really happy and I hope to stay more years here.
"The situation is weird because I have an option. Right now as we speak, I will be out of contract, but the most important thing is to keep the club in the Premier League.
"I'm happy because I am playing and if I am playing and doing well, Newcastle will extend my contract."
Diame put in a decent performance to help Newcastle secure a 1-0 victory over Huddersfield Town at the John Smith's Stadium on Saturday.
"It was an important one. Everyone knows that this kind of game against another team at the bottom with us is important to get the result," he continued.
"To beat Huddersfield is amazing, I think they played well to be honest. They were on top of us but we went back with the three points."