The Gunners are chasing Zaha to strengthen the right-wing position, where academy graduate Iwobi featured regularly last season.
Zaha had reportedly told Crystal Palace he wanted a move to north London after returning from the African Cup of Nations.
The UK Sun had reported that Arsenal forward, Alex Iwobi was already considering leaving Arsenal.
The Nigerian player has denied reports in the media that he was threatening to leave Arsenal following their move for Crystal Palace star, Wilfred Zaha.
They quoted Iwobi as saying: “I am not one to chicken out. I have had it all over the years, being told I’m not good enough.
“So whenever the chance comes I always try and prove I should be starting. But it’s going to be difficult if Zaha comes. He will add more stress.
“I am up for the fight but the only time I would consider leaving is if I am not playing as much as I would like to.
“Obviously, my joy is to play football and not just sit out.
“If it comes to that, I would have no choice but to leave. But I would always put up a fight to play — that is what I have done all my life.
“We have big stars already, so by adding another one I’ll just have to prove I can do better than them.”
However, the Bronze medal winner with Nigeria at the just concluded African Cup of Nations took to his verified twitter handle (@alexiwobi) later on Sunday to deny the report.
He said: “Fake News & Click Bait! I Don’t know Why Some Newspapers Enjoy Twisting Words. I Hope We Sign World Class Players @Arsenal And Progress As A Team. I’m Looking Forward To The New Season. Happy Sunday. See the tweet below: