The primary aim of this research is to establish the time-dependent diffusion coefficient in a one-dimensional time fractional diffusion equation in Caputo sense by means of newly defined Monic Laquerre wavelets (MLW) and collocation points. We first give the definition of MLW by taking Monic Laquerre's polynomials into account. Later, time fractional diffusion problem is reduced into a system of ordinary fractional and algebraic equations by utilizing MLW. The residual power series method (RPSM) and the overdetermined data are applied to this system to determine the solution and the unknown time-dependent coefficient together in series form. In the end, illustrative examples are presented to show the stability and accuracy of the proposed wavelet method for the inverse problem of determining unknown time-dependent coefficient in fractional diffusion problems. The reliability of the proposed algorithm for the inverse problems is supported by high degree of accuracy in the given examples.