The Observer says currently at Sao Paulo side Portuguesa, Diogo has been monitored by Arsenal's scouting department for more than two years and the club have twice tried to sign him. In December they lodged an informal offer of around £3m for a player who scored 18 league goals last season.

Were Arsenal to succeed in signing the forward this summer they could seek an 'exceptional talent' visa to allow Diogo to play immediately in the UK. Should the application fail, he would be loaned to a Spanish club for two years until he qualified for a European Union passport.

"Diogo is better than Pato," said Portuguesa president Manuel da Lupa. "Arsenal have come twice to talk about him, but they never wanted to pay what Diogo is really worth. In 2006 they wanted to take him to England to [get to] know Arsenal and see if he would adapt to the country. I told them they needed to sign a pre-agreement worth five million reais [£1.5m], but they wouldn't do it.

"They came back again last year after he began playing regularly for our first team, but obviously he was more expensive. We want Diogo to play in the Brazilian league until the end of the year, reach the national team and increase his value."

The forward's representative, Rodrigo Righetti, said: "Diogo would love to play for Arsenal. But for now, he must wait for an offer that suits both the club and himself."