Dieke – one of two Scottish players in Powell’s squad – will be out for some considerable time with a suspected ruptured anterior cruciate ligament during Saturday’s 3-0 win over Cameroon.
Powell believes it is the worst possible news for 31-year-old Dieke – who had formed a solid partnership with Casey Stoney – and wished her a speedy recovery.
“This is devastating news for Iffy, and for the rest of the team,” said Powell, whose side face Brazil for the right for top spot.
“Iffy had settled into the squad so well and had quickly become an integral part of our success so far.
“I am sure she has the character to return to full fitness over time, but it is obviously a very sad moment for her and for Team GB, and the rest of the squad will want to wish her a speedy recovery.”
Chelsea’s Dunia Susi will replace Dieke pending clearance from the International Olympic Committee and FIFA.