Diarra previously made 19 appearances for the Premier League side from February 2012 until the end of last season, but his contract was not renewed and he was released by former manager Martin Jol.
He has been without a club since leaving Fulham and has now been offered the chance to resurrect his career under Felix Magath.
Magath has strengthened his midfield options by luring the 32-year-old back to Craven Cottage as Fulham battle to beat the drop.
It appears that the former Real Madrid midfielder has agreed a pay-as-you-play deal at Fulham, as a club statement confirming his signing said: "Diarra's short-term contract with Fulham will see his remuneration based on the number of appearances he makes for the first team."
Fulham sit bottom of the Premier League, four points adrift of safety with seven games remaining.
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