Digard had earlier revealed a £4m deal had been agreed but that PSG were insisting the whole fee must be paid up front.
As a result, the midfielder was suspended by the French club, pending the issue of "appropriate sanctions".
However, PSG claimed the suspension would not affect Digard's transfer situation.
Southgate confirmed his interest in signing the France Under-21 midfielder in early June.
"We've had our eye on him for quite a long time and we looked at him and were impressed when watching him play for Paris St-Germain and for the French national sides."
The former Le Harve player arrived in Paris with a blossoming reputation, but because of injury, he struggled to make an impact in the last campaign and made only 15 appearances.
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