Chelsea, Arsenal and Tottenham Hotspur are also interested in Modric, who was instrumental in Croatia's victory over England at Wembley in the final Euro 2008 qualifier last month, with Dinamo Zagreb president Zdravko Mamic arriving in London this week to discuss Modric's future.

	City boy? Luca Modric could be on his way to Manchester

Arsenal sent a scout to watch Modric during Dinamo's Uefa Cup defeat by Hamburg at the start of this month, while Chelsea manager Avram Grant was in attendance at Croatia's game against Macedonia in November.

Chelsea have held recent talks with Dinamo and Tottenham have told the Croatian side that they are "very serious" about bidding for him, with Spurs coach Juande Ramos keen to bring in new players.

However, while Chelsea's priorities lie with capturing the signings of Nicolas Anelka and Daniel Alves, Tottenham have been put off by the size of the fee.

Money represents no such obstacle for Eriksson, who is bankrolled by Thai chairman Thaksin Shinawatra.

City are expected to complete the signing of Modric, who can play down the left or in a more central role, as soon as the transfer window opens in January.