Arsene Wenger is now reportedly ready to let his centre-back go out on loan to Reading in order for him to gain some valuable first team experience.
Alan Pardew had reportedly hoped to have ther Upson deal complete for last Saturday's game at Walsall, however, the player is not believed to be over keen on a move to the Royals.
Pards has good links with Arsenal, last season Jamie Ashdown spent some time training at Highbury and playing in the reserves to help improve him as a player, whilst the two clubs have agreed to play a behind-closed-doors reserve team friendly next week.
Wenger, boss of the double winners, is said to be very impressed by the set-up at Reading and is eager to let several of his youngsters spend some time playing at the Madejski Stadium.
It is said that should Pardew fail to secure a deal for former England Under 21 star Upson then he may turn his attention to other Arsenal players.
Reading are keen to bring in cover for the central defensive partnership of Mackie and Williams.
Last week the Royals were not successful in their bid to bring ex-Scotland international Colin Hendry to the club, whilst many fans believe that Charlton's Steve Brown could be set to sign.
It is also rumoured that Pards was in talks with ex-Manchester United star Ronny Johnsen before he completed a move to Aston Villa last week.