The winger has been a long-term City target and the Premier League champions are finally closing in, Press Association Sport understands.
He has been given extra time off by the Foxes after playing in Algeria’s international games in June and is due back for training next week.
No deal has been struck although a £60million fee is reportedly enough to convince Leicester to sell.
Leicester rejected an offer of £50m plus winger Patrick Roberts – who is valued at £15m – in January, ultimately demanding a straight £80m which City refused to pay.
Mahrez missed two games during the saga but Leicester held firm for the second successive window.
They were not prepared to let him go in January with little time to find a replacement but now have a month to find reinforcements, having already signed attacking midfielder James Maddison from Norwich for £24m.
Mahrez first asked to leave Leicester last summer and the club rejected three bids from Roma.
The 27-year-old said his transfer request had “gone” in May but left his future open.
He helped the Foxes to a shock Premier League title in 2016, scoring 17 times, and then played a major role in the club reaching the Champions League quarter finals in 2016/17.
Mahrez, who signed from Le Havre for just £400,000 in 2014, has made 179 appearances for Leicester, scoring 48 times.
Manchester City have also been linked with Napoli midfielder Jorginho with the Italy international reportedly left out of their pre-season training camp squad.
Provided by Press Association Sport
Willian, 29, is away on international duty with Brazil, currently participating in the World Cup in Russia, while Barcelona are negotiating a deal with the Blues.
It was earlier reported that Willian was willing to leave if Antonio Conte remained in charge next season.
He made 55 appearances for Chelsea last season and scored 13 goals in all competitions.
The summer transfer window for all international deals is open.
With the transfer rumours growing in pace and volume during this ‘silly season’, it can be difficult and painstaking to separate the stories of some legitimacy from the rest of the noise.
Fortunately, we’ve taken it upon ourselves to do it for you.
Below, you’ll find some of the latest transfer news churned out of the Rumour Mill broken down and analysed for your benefit along with our calculated predictions.
Ajax have moved to re-sign their former star who is deemed surplus to requirements at Manchester United.
According to De Telegraaf, the Dutch side want to capture the 28-year-old’s signature this summer and bring him ‘home’.
Why it will happen: Blind grew up in Amsterdam and would guarantee his chances of first-team football at the Johan Cruijff Arena.
Why it won’t happen: It is thought the versatile defender and midfielder would have to take a huge pay cut to link-up again with his former team.
Prediction: So long as the financial elements of the deal suit both player and the Red Devils, expect this transfer to go through.
Why it will happen: The 40-year-old is unattached since leaving Juventus last May after a glittering 17 years and a move to PSG gives him the chance to continue to ply his trade at the highest level.
Why it won’t happen: Buffon could potentially only come in as a back-up, with new boss Thomas Tuchel not being able to guarantee regular first-team football.
Prediction: This deal certainly has legs but it remains to be seen whether all parties can come to an arrangement.
Why it will happen: The dynamic midfielder is thought to be on a lookout for a new challenge and is concerned about the competition for places at the Parc des Princes.
Why it won’t happen: The Sky Blues are thought to be among the frontrunners to sign him, but they to have a large squad while there are of course other clubs interested in his signature.
Prediction: With his contract running up, the French giants might feel it’s best to cash in on him instead of him leaving for next to nothing.