Manchester City are keen to offload Joao Cancelo on a permanent basis this summer, according to a report.

The Portugal international surprisingly left the Etihad Stadium for Bayern Munich on loan in the January transfer window after falling down Pep Guardiola's pecking order.

It was alleged that a falling-out with Guardiola was a key factor in Cancelo's temporary exit, although the defender insisted that his decision was purely about game time.

Bayern possess the option to make Cancelo's stay permanent for €70m (£62m), but sporting director Hasan Salihamidzic has admitted that it will be difficult for his side to cough up the funds.

The Bundesliga champions are therefore not expected to take up their option to keep the 28-year-old, who would subsequently return to Manchester for the 2023-24 campaign.

With Cancelo still contracted to the Premier League champions for another four years, he has left the door open to winning more silverware in sky blue once his time in Germany comes to an end.

However, The Mirror claims that City instead want to cut Cancelo from their ranks permanently, as Guardiola has told club chiefs that the right-back is no longer in his plans.

While new Bayern head coach Thomas Tuchel is an admirer of Cancelo's qualities and is keen to keep him around, the Bundesliga champions will not pay his release clause under any circumstances.

Instead, Bayern might try to extend the 28-year-old's loan for another year or try to drastically reduce the fee for a permanent move to as little as £30m.

Barcelona will be in the market for a new right-back this summer and are also said to be attentive to Cancelo's situation, but the Blaugrana cannot afford to pay more than £60m either and would also favour a loan deal.

As a result, the report adds that City will have to accept a lower bid from either interested party to offload Cancelo, who will take on his parent club in the Champions League quarter-finals later this month.

Since swapping Manchester for the Allianz Arena, Cancelo has posted one goal and four assists from 12 matches in a Bayern shirt, playing 89 minutes of Saturday's Bundesliga win over Freiburg.

The former Juventus and Villarreal man boasts nine goals and 22 assists from 154 games at Man City, but Guardiola is blessed with John Stones, Kyle Walker and Rico Lewis as his current right-back options.

Cancelo has two Premier League titles, two EFL Cups and one Community Shield during his four-year spell at the Etihad, and he has been named in the PFA Team of the Year for the last two seasons.