City are reportedly considering a move for highly-rated Southampton teenager James Ward-Prowse, should Milner continue to stall on signing a new contract.
Ward-Prowse, 19, has been one of the stars of Ronald Koeman's new-look Southampton side and in the four appearances he has made so far this season he has created two assists.
After the summer that the Saints have had selling star names, you can guarantee that they would vehemently resist all attempts City make to sign their star youngster.
The Portsmouth-born player would make an ideal replacement for the 28-year-old City man thanks to his versatility and excellent range of abilities.
Ward-Prowse can play just behind the striker, out wide or a little deeper in the centre of midfield. He has superb passing and shooting skills, and is known as a deal-ball specialist at Southampton.
The England under-21 international should however be wary that moving north to City may not be the best move at this stage of his career. The reigning Premier League champions have a knack of buying English youngsters with great potential and then not giving them a chance in the first-team.
You only have to look at the Manchester City careers of Jack Rodwell and Scott Sinclair to see why it could be a retrograde decision for Ward-Prowse to make the switch to the Etihad.
Reports over the summer suggested that Milner was looking for a way out City as he wasn't content with his role of warming the subs bench each week. The senior England international has only a year remaining on his contract at the Etihad and should he refuse to extend that deal, City would certainly have to part ways with him in January or risk losing him for nothing at the end of the season.
Just last week it was rumoured that Everton boss Roberto Martinez was keen to make a £5 million move for the England international in January.
Losing Milner would be a big blow for Pellegrini as it would mean parting with another home grown player. City currently have seven registered in their squad, with two of them being Richard Wright and Frank Lampard.