Redknapp is trying to broker a loan deal for Diarra, who he signed for Portsmouth back in 2008, but Madrid are in favour of a permanent transfer with a fee in the region of £8.5 million.
Diarra is available after Real Madrid's summer spending spree secured the services of Mesut Ozil, Sergio Canales, Sami Khedira and Angel Di Maria but Redknapp says any deal is far from done with the 25-year-old's wages proving a problem.
"I like Diarra," he said. "I signed him and had him at Portsmouth, but it would be a difficult one, financially for us. He's on big, big wages at Real Madrid.
"We haven't made an approach but I think his agent has rung up and spoken to my chief scout but it's not gone any further than that. If they do want to get rid of him it would be difficult to do a deal."
But Redknapp rejected claims that Peter Crouch would be on his way out of White Hart Lane, with Everton's Steven Pienaar heading the other way.
"Peter Crouch is not for sale. He won't be going anywhere. He's a fantastic player. He played up front alone at Stoke because we were struggling.
"Crouchie hasn't got a price on his head. He's not going anywhere if we want to move this club forward. Pienaar's a great player but he's an Everton player. I've never spoken to David Moyes about him."