Selsouli, a silver medallist at the world indoor championships this year, has already served a two-year suspension for doping and now faces a lifetime ban under World Anti-Doping Agency rules.
The 28-year-old became the hot favourite to win 1,500m gold in London when she ran three minutes 56.15 seconds to win the Paris Diamond League at the Stade de France earlier this month.
It was the fastest 1,500 metres time since 2006 and shaved more than four seconds off her personal best, raising question marks that were answered on Wednesday.
"The prohibited substance furosemide was found in Mrs Alaoui Selsouli's sample collected... in Paris on 6 July 2012," a spokesman for the International Association of Athletics Federations said in a statement.
"Alaoui Selsouli has waived her right to the B analysis, and as a result has now been provisionally suspended from all competition in athletics.
"In accordance with IAAF Rules, she still has the right to request a hearing which needs to be held by the Moroccan Athletic Federation within the next three months."
Selsouli was banned for two years in August 2009 for using the banned performance enhancing blood booster Erythropoietin, commonly abbreviated as EPO.
Diuretics are used to mask the presence of illegal drugs that are screened for doping testing by concealing their presence in the urine sample.
WADA said on Tuesday that more than 100 athletes were caught doping and sanctioned in the months leading up to the London Olympics in a drive to eliminate cheats before they reach the Games.
There will be around 6,250 samples analysed at the Games, more than any other Olympics. There were 20 proven cases of doping at the Beijing Games four years ago, including six horses, down from 26 cases in Athens in 2004.