Sturridge had been expected to secure a move to Stamford Bridge after turning down a new deal at City.

With the pacy forward being under the age of 24, City are entitled to compensation and the fee is likely to be decided by a tribunal.

The Premier League rivals have failed to agree on a settlement, but reports suggest Chelsea could end up paying £5million for the 19-year-old.

He had also been linked with Aston Villa and West Ham, but will add to the attacking options at Carlo Ancelotti's disposal this season.

Sturridge, who is the nephew of former Derby forward Dean Sturridge, made his debut for City in February 2007 against Reading.

During his City career, he scored six goals in 32 games in all competitions, with the majority of his appearances coming from the bench.