Diame’s contract with Wigan expires next month, with the 24-year-old attracting interest from numerous Premier League clubs including Liverpool, Arsenal and Tottenham.
However, according to the Daily Mirror, Diame has decided his future is not in the Premier League, with Malaga leading the hunt for his services.
Liverpool were said to be extremely keen on landing the midfielder ahead of a summer in which they are expected to seek out lower value transfer targets.
With the Reds searching for a new manager and director of football following Kenny Daglish and Damien Comolli’s departure, it is likely that the pursuit of transfer targets at Anfield has been put on hold for the time being.
Manchester United were previously in the running for the Senegalese international but were reportedly scared off by his heart condition, which Wigan were aware of when they signed him from Rayo Vallecano for £3 million three years ago.