Thiago Alcantara [Reuters].

Manchester United face a battle with Real Madrid for the signature of Thiago Alcantara, according to reports in Spain.

Online newspaper Cadena Ser claims new Real coach Carlo Ancelotti has met with club president Florentino Perez and told him the squad's current quorum of midfielders is not sufficient.

Cadena Ser also claims that Ancelotti has suggested two names: Thaigo and his fellow Spain under-21 star Asier Illarramendi.

The story has also been cited by El Mundo Deportivo, a Barcelona-based sports newspaper with close links to the Nou Camp.

If Real were to move for the Brazil-born midfielder, it would contradict remarks made by Perez just two weeks ago. The president claimed that "we are not going to do anything hostile towards Barcelona" and "we are not going to pay the buy-out clause for Thiago."

However the Madrid giants, who endured a disappointing season in both domestic and European competition last year, are currently overhauling their squad with a firm emphasis on youth.

Perez has already completed the signings of three 21-year-olds - right-back Daniel Carvajal, midfielder Casemiro and playmaker Isco, another member of the Spain squad which won the European Under-21 championships this summer.

News of Real's interest could cause alarm at Old Trafford, as it is believed United have made Thiago their top transfer priority this summer.

The midfielder is available for just €18m after his buy-out clause dropped almost six-fold, due to a lack of playing time last season. It is reported that he wants to move away from Barcelona in the hope of securing more first-time opportunities and winning a place in the full Spain squad for next year's World Cup.

United's cause was buoyed earlier this week by Dutch legend Johan Cruyff, who urged Thiago to leave the Nou Camp in pursuit of his professional ambitions.

Cruyff, a former Barcelona player and coach, said: "If he really has little chance to play, then he has to go."

Although United have reportedly met with Thiago's father and agent, Mazinho, and agreed a salary of €6m per year, no announcement has yet been made on the future of the player, who is currently on holiday.