The Manchester Evening News says Alvarez will be a part of the City squad next season after the club's decision makers came to an early decision on his future.
City paid an initial £14.1m to sign the exciting forward from River Plate, but allowed him to stay at the Argentine club for the remainder of the English season.
The initial plan was to bring the 22-year-old to Manchester for pre-season training this summer under Pep Guardiola, before making a decision over whether to loan him back to River Plate, send him to another club in Europe, or keep him at the Etihad.
However, less than two weeks since the 2021/22 campaign has concluded City bosses have determined that Alvarez will be part of Guardiola's plans for next season. He becomes the second major addition to a team that topped the scoring charts in England and Europe last season, following the £51m signing of Erling Haaland from Dortmund.