Theo Walcott has rejected a contract offer from Arsenal but talks are ongoing between the club and player.
The 23-year-old winger, whose contract expires in 2013, wants to stay and is willing to continue negotiations.
Manchester City are aware of the situation and will try to set up a deal for the England international if they get any encouragement from Arsenal.
It is understood Walcott has been offered an improved five-year deal worth £75,000-a-week.
If no agreement can be reached, reports suggest Arsenal will sell him before the 31 August transfer deadline.
City have already made it clear they are chasing another winger, after selling Adam Johnson to Sunderland.
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