According to the Sun, the 27-year-old is free to go and play is football elsewhere, while the Gunners are also open to selling David Ospina and Lucas Perez.
Welbeck has one year left on his contract at the Emirates Stadium, but is yet to be offered a new deal as Everton weigh up a £15m move for the England striker.
He sits behind Pierre-Emerick Aubameyang and Alexandre Lacazette in the pecking order for a central striking role, while Henrikh Mkhitaryan and Alex Iwobi are likely to be preferred out wide, in Unai Emery's attacking lineup. However, Everton will only move to sign him if they fail in their pursuit of highly-rated Bordeaux winger, Malcom.
Welbeck joined Arsenal for £16m from Manchester United back in 2014 but is now free to go and seek regular football elsewhere, with fellow striker Lucas Perez also being given the green light to move on.
Danny Welbeck who has scored 16 goals for England is left warming the bench, when we badly needed a goal. What a joke.— Jeanette true gooner (@65douglas12) July 11, 2018
Since his £17m arrival from Deportivo la Coruña, Perez has only scored one Premier League goal for Arsenal and spent last season out on loan at his former club.
Despite this, the Spaniard is said to be keen to stay at Arsenal and fight for his place, a fight which would prove very difficult indeed - considering the amount of competition he has in and around his position.
Meanwhile, the £19.2m signing of Bernd Leno has opened up the exit door for Colombian goalkeeper David Ospina.
All three players could be set to leave the club before the summer transfer window closes on 9 August, although Emery has ruled out any further incomings before that date.