Manchester City have reportedly decided that they will pursue Carlo Ancelotti should they opt to sack Manuel Pellegrini at the end of the season.

Pellegrini was handed a new contract, which expires in 2017, in the summer, but if the club fail to win a trophy this season, the Chilean could be shown the exit door.

Pep Guardiola has been City's number one target, but there are reports that the Spaniard will be offered a new deal worth £17m a year at Bayern Munich.

According to the Daily Star, City regard Ancelotti as the best alternative if Guardiola is unavailable, and the former Real Madrid boss is keen on taking the job after hearing of their interest.

The Italian coach, who was linked with Liverpool before Jurgen Klopp was appointed manager last month, has been out of work since getting sacked by Madrid in May.

Despite City thinking of potential candidates, at this stage there has been no indication that the club will part ways with Pellegrini, who guided the team to League Cup and Premier League glory in the 2013-14 campaign - his first season in charge.