Man City expected to up the ante after having £50m bid for Alexis Sanchez rejected
City favour a straight cash deal for Sanchez, but the Gunners are thought to be interested in taking Raheem Sterling as part of any deal before.
Sterling, who cost £49m from Liverpool two years ago, is understood to be open to a move to the Emirates Stadium in the belief that Sanchez's arrival would push him further down the pecking order, despite his impressive start to the season.
City are ready to arrange for Sanchez to have a medical in Chile, where he is on World Cup duty, and have already agreed the framework of personal terms worth about £325,000 a week.
If City manage to persuade Arsenal to sell Sanchez, the transfer is likely to raise fresh doubts over Sergio Aguero's long-term future.
Meanwhile, Arsene Wenger is trying to muscle in on City's attempt to sign £30m-rated Jonny Evans from West Brom, even though the defender's preference is to go to Manchester.