Raheem Sterling
Sterling has been urged to remain at LiverpoolGetty Images

Manchester City are preparing a massive £40m ($62.2m) move for Raheem Sterling, which will be their last offer for Liverpool, according to the Daily Mirror.

The Citizens have earmarked the midfielder as their priority signing this summer, but are unwilling to pay over the odds, as it will adversely affect their bid to sign other players for top money.

City have already been linked with a world record move for Paul Pogba in the summer and a move for Sterling will take their spending to beyond the £100m ($155.6m) mark, which could spark a duel with Uefa over the Financial Fair Play regulations.

Sterling has refused to sign an extension on his current contract with the Reds, which expires in 2017 but Liverpool are holding out for a fee in the range of £50m ($77.8m), something the Citizens have refused.

However, there is confidence in the management that the reported fee will be enough to prise the youngster to Manchester, where he will replace James Milner, who has transferred to Anfield, in a wide role.

Manchester United are also believed to be interested, with the club reportedly having a bid rejected by the Reds and are preparing yet another swoop for one of England's best talents in the market.

It will be a difficult move for Louis van Gaal, given the history between the two clubs but a bid eclipsing that of City's could turn the tide in their favour.

United have already completed the signing of Memphis Depay from PSV Eindoven and have a wealth of riches in that position, which can also be accommodated by Angel di Maria.

Sterling has not had the same influence this season like he did in the presence of Luis Suarez and Daniel Sturridge, and with Liverpool falling out of a Champions League spot, is looking to ply his trade elsewhere in search of major honours.