Manchester United are still believed to be keen on signing the 24-year-old, while Chelsea have been monitoring developments at the Emirates over the past few days.
Arsenal want the France international to sign a new five-year deal worth £90,000-a-week.
But according to The Sun, the former Marseille midfielder is close to agreeing a £150,000-a-week deal with City, who are stepping up their summer spending spree ahead of the start of the new season and their first Champions League campaign.
United were believed to be favourites to sign the midfielder and it is has been thought they will pay up to £25m, although Sir Alex Ferguson has alternatives lined up in Udinese winger Alexis Sanchez and Inter Milan midfielder Wesley Sneijder.
City boss Roberto Mancini was believed to want to make an immediate £20m bid for Nasri in a bid to prevent him joining the Premier League champions.
Inter Milan and Juventus are also believed to be interested in luring him away from the Emirates and Arsenal boss Arsene Wenger would much rather sell him to an overseas club rather than an English rival.
Wenger will this week launch a final bid to convince Nasri to sign a new contract, but there is a growing feeling that the Frenchman has played his last game for the Gunners.
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