The Guardian says Marwood had initially been lined up as a director of football, but City have offered him a different role because Hughes did not want anybody brought in above him.
City have been talking to Marwood, currently the head of the UK football operations for Nike, for several weeks about appointing him in a role that would reunite him with the club's executive chairman, Garry Cook. The two men had worked together at Nike.
Cook initially floated the possibility that Marwood could work as director of football but Hughes was opposed to the idea. The talks were amicable and Cook accepted Hughes's view that there were many examples at other clubs when the creation of such a position had done more harm than good.
The former Arsenal winger will join City as a 'football administrator'.