At least six clubs across Europe are now interested in signing Phillips who is expected to leave City in January having fallen out of favour with Pep Guardiola.
The defensive midfielder has started just two matches this season and is desperate for regular game-time with a place in the England squad for Euro 2024 at stake.
Newcastle and Juventus were the first two sides to express an interest in the 28-year-old, however both are now unlikely to make a move due to financial restrictions.
Crystal Palace and West Ham are also keen on signing Phillips on loan, though City would prefer to off-load the player, whom they signed just 18 months ago from Leeds for £42million, permanently.
Now, The Telegraph report that Spanish giants Barcelona and Atletico Madrid have entered the race for his signature.
They add that Phillips’ future is set to be decided next week, and while a move to the La Liga clubs may be more eye-catching, joining another Premier League side may do more for his England hopes.
Barcelona are looking for a short-term midfield reinforcements having lost Gavi to a season-ending injury, and had been offered the chance to sign Jordan Henderson prior to his move to Ajax.
City are relaxed over Phillips’ situation despite reports that their demands over any potential deal are putting off interested parties.
It was said that they wanted a significant loan fee plus an obligation to buy included in the deal, though some reports claim that this is not actually the case.
That will be music to the ears of Palace manager Roy Hodgson who recently admitted that while his side are interested in bringing the Three Lions star to Selhurst Park, they cannot afford a permanent transfer:
‘If they are purely going to sell him, then I wouldn’t think we would be in the market. If they are going to loan him, I would like to think that possibly we could put our hand up and push ourselves forward.
‘What we could then, of course, offer is probably the chance of playing regular football in the Premier League in the build-up to what is going to be a very important summer for England and obviously for him.’
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