Manchester City are in talks with Milan and Juventus over the transfer of Mario Balotelli and are exploring the option of loaning the striker out until the summer ahead of a permanent move.

The champions want around €23m (£19.75m) for the 22-year-old and it is understood that Milan have made an initial offer close to €20m. But last night Juventus also entered the bidding with City hoping their interest would help push up the price. The player is keen to return to his homeland and is willing to take what represents a small pay cut regarding the terms on offer, which are €5m a year tax-free, plus a sizeable signing-on bonus.

It is understood that City do not expect any resolution before Tuesday night's game with Queens Park Rangers at Loftus Road but a deal could be done before Thursday's transfer deadline. Mino Raiola, Balotelli's agent, is in Manchester to try and seal an agreement, having already failed earlier this month to persuade Ferran Soriano, City's chief executive, to allow the striker to move on a temporary basis to San Siro until the end of the season.

City are thought to favour a permanent transfer in the current window but a loan deal remains a possibility. Another potential stumbling block is Milan's desire to pay any fee in six instalments. City, conscious of Uefa's financial fair play regulations, may want a lump sum that can be reinvested swiftly. However, there is hope in both Milan and Turin that, given Balotelli's chequered time at City plus the player's desire to move, a deal can be completed before the window closes.

Adriano Galliani, Milan's vice-president, has been in consultation with Raiola regarding the best way to proceed. Two years ago Raiola was pivotal in the deal that took Zlatan Ibrahimovic, another of his players, from Barcelona to Milan.

If Balotelli were to leave, City would have only three recognised strikers – Carlos Tevez, Sergio Agüero and Edin Dzeko. Whether the club would try to replace Balotelli before Thursday's deadline is moot. It is thought, though, that City plan to play a 4-3-3 formation next season, a system that utilises only one centre-forward, meaning that three strikers for one position would be enough.

Asked on Monday about Balotelli's future, David Platt, City's assistant manager, chose his words carefully. "I haven't heard anything," he said. "I saw that speculation yesterday. It's a shame Robbie's [Roberto Mancini] not here. He might know more than me but he [Balotelli] is still a Manchester City player. I don't think anything is going to happen."

He also claimed that Balotelli is in contention for Tuesday evening's match following illness. "Mario was back on the training pitch yesterday [Sunday]," Platt said. "He was in the squad for the weekend [at Stoke City], it was only a 24-hour virus he had so he'll be up for selection."

In reality Balotelli may have played his last game for the club. Last week it emerged that his Cheshire home, which the Italian rents, has been on the market since 11 January, a sign that he was conscious of the need to keep his options open before any potential move away from City. Reports on Monday suggested that Balotelli had a farewell party for friends in Manchester on Sunday night.

Balotelli's off-field misdemeanours during his time at City have included fireworks going off in the bathroom of his home, before last season's derby at Old Trafford, in which he scored twice in a 6-1 rout of Manchester United.

This season he has started only seven times in the Premier League, scoring once – in a 2-0 win at Wigan in November – and last month he came close to taking City to a tribunal after refusing to accept a two-week fine for the ill-discipline that meant he missed 11 games due to suspension last term.

The striker called off the tribunal only at the 11th hour and finally accepted the £340,000 fine but a fortnight later he was pictured grappling with Mancini on the training ground after the manager tried to censure him for a dangerous tackle on Scott Sinclair. This last episode finally convinced Mancini, who had become isolated in his support of Balotelli, that the striker's future lies elsewhere.