Talks between the Premier League club and Sturridge's represenatives appear to have broken down and it seems that the former Coventry Academy player could be on his way out as his current contract expires in June.
Aston Villa and Chelsea have both been linked with a move for the 19 year old, who is reported as wanting £40k a week to stay at Manchester City.
Manchester City boss Mark Hughes told BBC Radio Manchester that talks had broken down and said: "Where we are at the moment needs a shift in position from his advisors.
"We have made an offer which is a good offer for Daniel at this stage of his career and that was refused a couple of weeks back."