Dunne to join top earners at Man City
That will tie him to City for the remainder of his career - and earn him a lucrative testimonial.
City boss Sven Goran Eriksson sees Dunne as a cornerstone of his defence alongside Micah Richards.
The new deal would double Dunne's money as City reward him for both his loyalty and performance levels.
But the new agreement will disappoint former Eastlands boss Kevin Keegan, who had earmarked Dunne as one of his first Newcastle signings.