The Daily Star Sunday says City plan to discuss a new £180,000-a-week contract with Balotelli in the new year.
The controversial Italian has become a hot property after his super show at Euro 2012.
Balotelli, 22 will have only two years left on his contract at the end of this season and City want to protect his value.
He is now regarded in the £40million bracket with strong interest from Paris St-Germain and the big clubs in Italy.
Balotelli earns £110,000-a-week.