Man City want Diego Godin to shore up their defence
The Atletico Madrid defender has a £28million buyout clause and City are unlikely to be able to negotiate a lower fee.
Godin, 29, has been one of the top centre-backs in Europe over the last three seasons.
He joined Atletico in 2010 and helped them break down the Real-Barcelona dominance in La Liga by winning the title in 2014.
Atletico were finalists in the Champions League – losing to rivals Real – in the same season.
The 6ft 1 defender has 92 Uruguay caps and has been coveted by both Manchester United and Chelsea in recent seasons.
But, according to the Daily Mail, City have begun internal discussions over an approach.
Diego Godin battles with Javier Hernandez for possession in the Madrid derby
City currently have Vincent Kompany, Eliaquim Mangala, Martin Demichelis and Jason Denayer at centre back.
They were reportedly interested in John Stones but having already spent £49million on Raheem Sterling they appear unwilling to compete with Chelsea for his signature this summer.
Godin – with his buyout clause – would be a more straight forward purchase, although it would show a lack of faith in Mangala who signed last summer for £31million.
The France international struggled in his debut season but has spoken of the need to step his game up.