The 23-year-old has also had his loan spell at League One outfit Lincoln City terminated as a result of legal proceedings being brought against him.
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Diamond was initially arrested over the incident which is alleged to have happened in Tyne and Wear in May 2022.
And Northumbria Police have subsequently charged him over the sexual assault following an investigation.
Lincoln released a statement on Wednesday where they declared his loan had ended, while failing to give a reason why.
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They said: "Jack Diamond's loan spell at City has been terminated with immediate effect.
"The club are unable to make any further statement at this time."
Following the news of his charge, the Black Cats stated on their website: "Sunderland AFC has been notified that criminal charges have been brought against Jack Diamond by the Crown Prosecution Service.
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"The player has been suspended with immediate effect, pending the outcome of the judicial process.
"His loan agreement at Lincoln City Football Club has also been terminated.
"As this matter is subject to a legal process, the Club will not be making any further statement at this time."
A spokesperson for Northumbria Police said: "In May last year, we received a report that a woman had been sexually assaulted inside an address in the Washington area.
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"An investigation was immediately launched and a man was subsequently arrested.
"Jack Diamond, 23, of Fatfield, Washington, has now been charged with one count of rape and one count of sexual assault and is due to appear at South Tyneside Magistrates' Court in May."
Prior to having his loan spell terminated at Lincoln, Diamond had chipped in with six goals and four assists in 31 league matches.