Diarra has won the last four league titles with Lyon
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Mali international midfielder Mahamadou Diarra has agreed personal terms with Real Madrid over a five-year deal.
Diarra's French club Lyon agreed to sell to Real for a reported £17m after the 25-year-old midfielder threatened to go on strike.
"Our coach Fabio Capello had asked for him because he considered him to be essential," Real president Ramon Calderon told the club's website.
"Capello thinks he'll be key in helping form a solid block in midfield."
The centre of midfield has been a problem for Real since French midfielder Claude Makelele left for Chelsea in 2003.
Calderon added: "He will help us correct our weaknesses of previous seasons.
"Capello has always said that we will concede very few goals this season and I'm really excited because I think he is a great player."
Diarra is the fourth player Calderon has signed since winning the club's presidential elections in July and the Real president hinted there would be more arrivals before the transfer window closes on 31 August.
"There's a week or so left until we finalise the squad and I think we will be able to provide the fans with another reason to celebrate before then," said Calderon.