Manchester City will not appeal the £49m fine and Champions League squad restrictions imposed on them by UEFA for their breach of Financial Fair Play rules.

Manuel Pellegrini will only be able to use 21 players in the next campaign of the European competition.

The Premier League champions will have to operate with more control in the transfer market over the next two seasons to avoid further punishment.

They will be able to reclaim £32m of the fine, and have the squad restriction lifted in time for the 2015-16 Champions League, if they comply with the UEFA Club Financial Control Body's financial measures.

A statement on the City website read: "Manchester City Football Club can confirm that at the end of the current financial year (May 31st) it is on course to financially break even, as planned. Operating with no debt, the club is realising its football and commercial opportunities whilst continuing unprecedented investments in both youth development and the local community

"From the outset, the club has engaged with UEFA in its introduction of the Financial Fair Play Regulations in good faith and without prejudice and in a transparent and collaborative manner. The club's position is that it is beholden upon UEFA and the European football establishment to ensure the same. The club can confirm that it has been in discussions with UEFA over the last month - in relation to the application of Financial Fair Play regulations - as has been widely reported and communicated by UEFA.

"At the heart of those discussions is a fundamental disagreement between the club's and UEFA's respective interpretations of the FFP regulations on players purchased before 2010. The club believes it has complied with the FFP regulations on this and all other matters. The club's expenditure on new players for the upcoming summer transfer window, on top of income from players it might sell, will be limited to 60m euros."

French giants Paris Saint-Germain have been hit with the same penalties as City.