Arsenal are sandwiched between the two Manchester rivals, but Law believes the Londoners will be squeezed out of the local battle for the crown.
"I think both United and City will be in the Champions League next season. The pair of them will be in the top four for sure," Law told the Manchester Evening News.
"I think for the city of Manchester that will be really something special. Could they actually be the top two? It is not beyond them. You never know, they could be one and two in England.
"The other challengers aren't having a great time of it.
"City are going to be challenging right to the end. I feel the Blues are now building up to being a real and serious power.
"Okay, some results haven't gone too well for them but it is not easy to make a team perform instantly like they have been together for years and years. As Bill Shankly said it is never over until you cannot possibly do it. If there are two games left and you are seven behind forget it.
"If you are five behind you are in with a chance. City are still in a great position.
"They have got the potential. City could win the title. It is entirely possible. It won't be the end of the world for them if they don't win it."