The French midfielder has spent the entire season on the treatment table but could get a new contract next month.
The France international has suffered from serious injuries in recent seasons and has not featured for the Gunners in 2014-15.
With his current deal at the Emirates Stadium expiring in the summer, most would expect Diaby to leave the North London club.
However, Wenger has admitted that contract talks over a new deal for the midfielder are set to take place next month.
“Diaby is progressing in training, step-by-step, but he’s not in a position to play yet,” the former Monaco coach told reporters, published by The Daily Express.
“I will have to talk to him soon (about the contract). I plan to do it in March.”
There are certainly pros and cons to the situation.
Wenger’s loyalty to his players is clear to see, as although Diaby has only started ten Premier League games in the last three-and-a-half seasons, the manager is willing to stick by his midfielder.
There is no doubting that on his day Diaby has all the attributes to be a star for Arsenal, while his return from injury would be as good as a new signing for the Gunners.
However, given Diaby’s injury record and his lack of first-team football over the last number of years, there is a feeling that Wenger is somewhat deluded to think that the 28-year-old can ever become an essential player for the Gunners.
As such, a new contract for a player that appears likely to be unavailable does not make sense and wastes resources and money that seems like it would be better utilised elsewhere.