The France international has been without a club since making an acrimonious departure from Lokomotiv Moscow in August and has not played in almost nine months.
Diarra reportedly refused to train for the Russian club following a bust-up with manager Leonid Kuchuk and has recently been working with West Ham ahead of prospective move.
However, Hammers boss Sam Allardyce confirmed after the 0-0 draw at Southampton that the France international would not be arriving at Upton Park.
"I have to say we have waited and we have negotiated for weeks to get the right deal and now we've got it, we find we can't get the right paperwork and the right clearance, so we have wasted his time and our time," he said.
"On the basis of the situation we're in right now, he would have been a very crucial player for us between now and the end of the season."
Source : PA
Source: PA