The Leicester City playmaker was due a hefty severance under the terms of the new deal he signed back in 2016, which has been one of the many issues dragging out the negotiations.
However, reports on Tuesday stated the Foxes have accepted an offer of around £60m from the Premier League champions, with a medical expected before the weekend is out.
City sources have confirmed Mahrez has played his part in recent days and is willing to take a personal financial hit, with the player now desperate to be a Citizen before pre-season training starts next week.
Not that the Algeria international will go short in Manchester, with his basic wages set to be increased to £140,000-per-week and further achievable bonuses included.
City boss Pep Guardiola has remained steadfast in his belief Mahrez will help improve his squad further and that he can be rotated effectively next season with winger Raheem Sterling on the right flank.
Leicester had dug in their heels over the amount the 27-year-old should be entitled to, citing two previously withdrawn transfer requests since he last renewed his £100,000-per-week contract.