It is understood that the drinks firm, which owns Smirnoff, Guinness and Captain Morgan, has already entered into discussions with London 2012 commercial director Chris Townsend.
The London Organising Committee of the Olympic and Paralympic Games (LOCOG) has also been in talks with beer brands including Anheuser-Busch (Marketing, 28 March), but a deal with Diageo would override this due to sponsors' desire for category exclusivity.
Earlier this year, Diageo hired Coca-Cola head of sponsorship Steve Cumming as Diageo global sponsorship director. It has already sought out agencies to help it promote the sponsorship should the deal be agreed.
London 2012 has signed three tier-one partners: Lloyds TSB, EDF Energy and Adidas. Sectors being tendered out to brands, including clothing and homeware, airlines and oil and gas. LOCOG, which aims to raise £750m through domestic deals, is also courting ties with brands in categories such as supermarkets.
Diageo has several existing high-profile sports ties, including sponsorship of the Vodafone McLaren Mercedes F1 team through its Johnnie Walker brand.
Diageo declined to comment on the deal and Chris Townsend was not available to comment.