Diouf, who has failed to hold down a first team place at Old Trafford following his move from Norwegian club Molde in July 2009, has also been linked with Wigan, Hoffenheim and Nurnberg.
The Senegal striker has scored seven goals in six appearances for the United reserves this season and has featured in the Carling Cup, but a loan move could provide valuable game time for the 24-year-old.
And Hannover sporting director Jorg Schmadtke has confirmed his club are aiming to sign a Diouf, a player they have been tracking for a long time.
Schmadtke said: "Both clubs, his agent and the player are in talks."
"He is fast, resolute and runs straight at goal. We have been after him already some time ago, unfortunately he then moved from Molde to Manchester United."
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