Starsport understands Arsenal are confident they will beat their London rivals to the midfielder with a move finalised before the weekend.
Ceballos has been told he is surplus to requirements this summer by Real Madrid but still sees his long-term future at the Bernabeu.
However, Spanish publication OK Diario claim the deal hinges on whether Zidane approves the transfer.
Ceballos was a regular under Julen Lopetegui for the most part of last season but slipped down the pecking order once Zidane returned to the helm.
Zidane is likely to give the green light to a loan deal but will want assurances Arsenal is the right choice.
At 22 years of age, Zidane knows the Spaniard needs regular playing time at a club that can help develop his game.
The France World Cup winner can’t guarantee Ceballos that with the club splashing cash on the likes of Eden Hazard, Luka Jovic and Rodrygo.
Speaking earlier today, Unai Emery praised Ceballos as he admitted the club are looking to bring in at least another three players.
Emery said: “I can say to our supporters we are going to make a very good team with the players there now and three or four players who can help us in a few days.
“Our target is to get three or four players who can really improve our squad now. We are being very, very demanding and first speaking about the possibility to sign very expensive players.
“The first player in our list is our first target, if we cannot achieve that the second. We are thinking every time they’re going to improve our squad.”
When quizzed on reports in Spain about Arsenal’s loan move for Ceballos, Emery added: “I don’t want to speak about the names. Dani Ceballos is a very good player.”
As for Spurs, they will now have to look at options elsewhere for another midfielder.
They have already made Tanguy Ndombele their club record signing in a £55m deal from Lyon, while they are desperately trying to keep hold of Christian Eriksen despite Real’s interest.