Diao's stoppage time strike from close range gave Stoke all three points and pushed Portsmouth closer to relegation from the Premier League - if they survive until the end of the season.
British media reported this week that the club, which faces a winding-up order for unpaid taxes from the Government's Customs and Excise department in the High Court on March 1, has debts of more than 70 million pounds.
There is no guarantee the 112-year-old club will still be in existence to fulfill its next scheduled home fixture.
Saturday's result left Portsmouth stranded on 16 points from 26 matches - eight points from the safety zone.
If the south-coast club survive the winding-up order, and are placed in administration, they will have nine points deducted, which would be a more palatable outcome.
They have a league match at Burnley next Saturday before meeting Birmingham City in an FA Cup sixth round tie at Fratton Park, their home since they were founded in 1898, on March 6.
The Revenue claimed in an earlier court hearing that Portsmouth were technically insolvent and should no longer be trading, but the club maintain there are parties interested in taking them over.
UTTER DEJECTION
The mood at Fratton Park turned to utter dejection after Stoke's winner in contrast to the earlier joy after Frederic Piquionne had put them ahead after 35 minutes.
Robert Huth's 50th minute equaliser for the visitors had silenced one of the noisiest sets of home supporters in the country but many were in tears at the final whistle.
A crestfallen Avram Grant, who succeeded Paul Hart as Portsmouth manager in late November, told ESPN:
"Everything is going wrong. We knew that one point for us was like getting zero points, so we wanted to win the game, then they scored from a counter-attack.
"We started the second half very well, but some of our players are not tall enough to defend set pieces and they equalised... then scored the second goal.
Earlier on Saturday, the Premier League announced it had refused the club's request to raise vital funds by selling players outside the transfer window.
That leaves Portsmouth still needing to find a saviour with time fast running out before their court appearance.
Hart, analysing the match for ESPN, said: "Stoke's first goal knocked the stuffing out of them. It killed them."
Portsmouth are still alive but their future looks increasingly bleak with every passing day.
‘I trained at Spurs and thought they’d give me a chance. But I received a letter thanking me but saying they didn’t think I was good enough – I was gutted’: How Tottenham missed out on signing Wales legend John Toshack
'People around the world know me because of my goal at Chelsea. I still can’t explain it, though. Drogba even asked me, 'Who are you? What did you eat?"' Newcastle cult hero Papiss Cisse recalls iconic strike at Stamford Bridge
