Welt am Sonntag says the Brazil international has already agreed a contract with Real, which now must negotiate a fee with Werder to land the Germany international, who is a favourite of coach Bernd Schuster.

Diego is upset after Werder's UEFA Cup elimination by Rangers and has also been publicly criticised in recent days by one of his great defenders, Werder sports director Klaus Allofs.

Indeed, German reports say the Werder dressing room are resigned to Diego quitting the Bundesliga club in the summer - and Real are favourites to land the midfield schemer.