The Mirror reports that City are prepared to let Bellamy leave for nothing and are ready for talks over a settlement with Bellamy.
City are desperate to get Bellamy’s £95,000-a-week contract off their wage bill.
Bellamy left Liverpool following a fall-out with Rafa Benitez, who was manager at Anfield at the time.
Liverpool boss Kenny Dalglish is reportedly keen on signing Bellamy and is ready to make a move for the striker who is set to be made available on a free transfer.
Bellamy is not part of City boss Roberto Mancini’s plans for the future at Eastlands.