Academy product Diangana struggled to break into the senior side before his loan to the Baggies last term, where he played an important role in their promotion to the Premier League with eight goals and seven assists in 30 Championship appearances.
Slaven Bilic was keen on the idea of the 22-year-old returning on a permanent basis this summer and, according to the Telegraph, it appears the Croatian has got his man.
It's understood West Brom's bid - which is expected to reach £18m following add-ons and bonuses - has been accepted by the Hammers, much to the dismay of West Ham supporters, and the player will now discuss personal terms with Albion.
The 22-year-old is set to become the Baggies' second signing of the summer after the club struck an agreement with Sporting CP over the permanent transfer of Matheus Pereira - another star in their promotion campaign.
Talks have also begun with Benfica for midfielder Filip Krovinovic, another loanee from last season.
Bilic is also targeting a move for Huddersfield forward Karlan Grant before the transfer window closes, while a potential swap deal which would see Sheffield United's Callum Robinson arrive at the Hawthorns in exchange for Oliver Burke is also in the pipeline.
As for West Ham, David Moyes is ready to use the funds from Diangana's sale to pursue Brentford's Said Benrahma.
The Championship outfit are demanding £30m for one of the second tier's standout performers last season, but the Hammers are confident that a deal can be struck closer to the £20m mark.
The Algerian midfielder scored 17 times and added another nine assists for Thomas Frank's side last time out, as the Bees missed out on their maiden Premier League berth after losing 2-1 in the play-off final to Fulham.