The Spain Under-21 international had initially been earmarked as a development player but will now join up with the first team due to a lack of senior options in his position.
His arrival will therefore end City's search for a left-back this summer - having previously lost out on Brighton's Marc Cucurella to Chelsea - and, in all likelihood, their transfer activity for summer.
Guardiola said: "The first action from the club was to sign him and send him on loan, but the moment we couldn't go through with Cucurella because the club decided we wouldn't pay this amount of money I said, 'OK, think (again) about the idea to loan Sergio'.
"I'm very very pleased with the team. It's not (big) in terms of numbers, but there is incredible versatility and they all have huge quality. If nobody moves, I think nobody's coming in."
"One hundred and 10 per cent I want him to stay," Guardiola of Silva. "I love him. I go weak when I talk about him!
"He is a special person. I don't know what is going to happen, but he knows how much we like him and want him and love him."