Diame missed Sunday's 2-1 defeat to Tottenham, the first time he has been absent since joining from West Ham United on transfer deadline day, with suspected tendinitis in his knee.
Scans took place on Monday to determine the extent of the injury, but medical staff were relieved to report yesterday that Diame had only suffered an "irritation of the patella tendon" in training.
The 27-year-old is expected to be back among his team-mates either tomorrow or Friday following a period of rest and provided there are no further complications Diame will be under consideration for this weekend's trip to Old Trafford.
The news will come as a welcome boost for manager Steve Bruce as he aims to halt a run of three consecutive defeats.
Diame has been a revelation since arriving at the KC Stadium in a £3m deal and his four goals in eight games have installed the Senegal midfielder as City's star of the early season.
A three-match suspension for Gaston Ramirez, who filled the void left by Diame before being sent off on Sunday, hastens the need for Diame's return in a week that sees City face trips to Manchester United and Everton in the space of five days. The injury will be assessed on a day-by-day basis to guard against a further reaction.
Diame's all-clear also keeps his ambitions of playing in the African Cup of Nations alive.
He was part of a Senegal side that qualified for the finals last week at the expense of Ahmed Elmohamady's Egypt and hopes to be part of the troubled tournament now due to be staged in Equatorial Guinea between January 17 and February 8.
In less positive injury news, City have seen promising full-back Brian Lenihan sidelined until 2015.
Lenihan has spent the last fortnight out on loan at Championship strugglers Blackpool, making his first two starts in English football with Lee Clark's men.
City had been hopeful the £250,000 signing from Cork City would remain at Bloomfield Road to collect much-needed experience but a knee ligament injury has now ruled him out for up to six weeks.
Lenihan returned to the City fold yesterday where he will undergo treatment, but another loan move will be planned for the New Year once he regains fitness.
Seven players remain out on loan and it would appear unlikely that City will be open to further business ahead of tomorrow's deadline for Football League clubs.
Centre-back Harry Maguire, who is at the bottom of the defensive pecking order, may be allowed to leave in the right circumstances but Bruce is content to see the summer signing from Sheffield United training with his Premier League stars.
