The Argentine defender verbally agrees to a contract extension after the being the subject of interest from Roma and Malaga last week.
Pablo Zabaleta close to extending stay with Man City
A key member of Roberto Mancini's squad, the defender was the subject of an €7 million (Dh36.8m) offer from Roma last week and had also attracted the interest of Qatar-funded Primera Liga club Malaga.
City have promised to improve Zabaleta's salary and lengthen his contract by one year until 2015. The 26-year-old is happy with the terms on offer and the new deal is expected to be formalised within the week.
Capable of playing on either side of the defence or as a holding midfielder, Zabaleta was a consistent starter last season as City qualified for the Champions League for the first time in their history and win the club's first silverware in 35 years, the FA Cup.
In total he made 45 appearances for Mancini.
The Italian manager will continue to push for further signings in addition to the Arsenal left-back Gael Clichy and the Montenegro centre-back Stefan Savic.
An approach to sign Sergio Aguero from Atletico Madrid has been accelerated regardless of the withdrawal of Corinthians €44m offer for Carlos Tevez.
City had acceded to the unusual schedule of payments proposed by the Brazilian club; one which would have seen the initial €10m instalment on the Tevez fee delayed until May 2012.
Corinthians, however, were unhappy with City's request that they provide a bank guarantee that the full sum would ultimately be paid, and pulled out of the transfer.
Yesterday, Tevez's agent claimed that the bank guarantees were not responsible for the deal fizzling out.
"To say that Corinthians could not provide guarantees for the money is nonsense," said Kia Joorabchian.
"Firstly, they are the biggest club in Brazil. Secondly, any club that makes an offer and cannot pay will get suspended by Fifa and have points deducted.
"This deal was always going to be difficult because of the timing. In the end, this came down to small details, to haggling over a relatively small amount of money, and it couldn't be done in time."
Joorabchian, who has a history of causing difficulties for City, said that he expected other clubs to come in for the unsettled Tevez: "He wants to leave but is still a City player at the moment and we will of course respect that."
"This is Carlos Tevez we are talking about, one of the best players in the world. We are not overly worried. We've just got to wait and see who comes in next for him."