Stephen Ireland is emerging as the key figure in Manchester City's pursuit of James Milner after Aston Villa asked if he could form part of a player-plus-cash exchange.

Ireland is available from City as Roberto Mancini looks to trim an oversized squad and the Villa manager, Martin O'Neill, wants the midfielder to bring more creativity to his team as they prepare to lose their player of the year.

The talks have accelerated in the past few days and it is now a question of whether the clubs can finalise the financial part of the deal. There were strong indications today that there has been a significant breakthrough, with Milner withdrawn from Villa's squad for the friendly against Valencia.

After the 0-0 draw, O'Neill admitted Milner was close to leaving: "We didn't play him against Valencia because there could be something happening in terms of the transfer over the weekend or Monday or Tuesday.

"To my knowledge no fee has been agreed but talks are taking place involving our chief executive and the chairman. I think for everyone's benefit it is probably time to try and get something done. It happened two years ago with Gareth Barry when it was not resolved. I'm sure that no one wants to go down that route again."

Ireland, a product of City's youth academy, spoke recently of wanting to stay at the club and compete for his place in a side which could have £130m worth of new players by the end of the transfer window. But Mancini is not planning to include him in his 25-man squad for this season, having not been overly impressed by the former Republic of Ireland international's form last season. This has been made clear to Ireland and, with the player slowly coming round to the idea, there is a belief on both sides that there could be more movement over the weekend.

"We are close but we still have time," Mancini said. "We are speaking to Aston Villa and we are near. I am hopeful."

Until now, Villa had been asking for a straight fee of £30m, with City making one bid of £18m plus a further £2m in add-ons, and informing Villa they were not prepared to go higher than £24m. The involvement of Ireland could see the clubs reach a compromise for a £27.5m package, taking into account the worth of a player who was voted City's player of the year two seasons ago.

City, however, are no closer to signing Mario Balotelli from Internazionale because of their refusal to meet the £30m asking price, coupled with a reluctance to meet the forward's financial requirements. The player's agent, Mino Raiola, has disputed that the teenager is asking for £180,000 a week but City believe the sums he wants are exorbitant and have found it increasingly hard to compromise.

Raiola has a reputation as one of the more difficult negotiators in the business, although it has not reached the point where City have threatened to walk away. It is, however, an increasing possibility that Balotelli will not be in Manchester in time for the opening game of the season at Tottenham Hotspur next Saturday.

"When you go in for a deal you must be patient," Mancini said. "Inter ask for this amount, and we want to pay something else," Mancini said. The thing is that when you want to buy someone for Manchester City the price is not normal. We want to improve and to do this we must often buy players who will cost more than they normally would. We want to pay the right price for Balotelli but we are closer with Milner. But we still have 20 days of the transfer window and I think we can find a solution."

The former Internazionale manager, speaking at a press conference to parade the club's four major signings, David Silva, Jérôme Boateng, Aleksander Kolarov and Yaya Touré, was asked whether he was confident of getting the best from a player with Balotelli's troublesome reputation. "I work with Craig Bellamy and Carlos Tevez; it will be easy," he said, jokingly.