"He is training with us," said Allardyce. "The deal is very close to being finalised. Once fit he will be a good addition. I hope, with a good few days' training, he will be close in seven to 10 days - if he finally signs the contract."
"He won't be in any good shape in terms of being on the bench on Wednesday or on the bench on Saturday against West Brom," he added.
Diarra, 29, is a free agent having left Russian side Lokomotiv Moscow at the end of last season, and has seen a number of reported moves fall apart since then.
Diarra brings a wealth of experience to Upton Park with him, having played for some of the world's biggest clubs during an impressive career.
After joining Chelsea from Le Havre in 2005, Diarra had spells with Arsenal, Portsmouth, Real Madrid, Anzhi Makhachkala and Lokomotiv Moscow.
On a free transfer, this could well be a masterstroke from Allardyce, with Diarra offering cover for Alex Song in midfield - which could be vital if the Cameroonian doesn't sign for West Ham permanently at the end of his loan spell from Barcelona.