City opened talks with De Bruyne’s representatives in September in a bid to secure his long-term future ahead of next summer’s World Cup.
PSG came close to signing the Belgian before he joined City in 2015 and the French club are keen to tempt him again as they look to assemble a side capable of winning the Champions League. They have made it known to the midfielder's camp that they will make a big-money move at the end of the season, if he were to give any indication that he wants to leave the Etihad Stadium.
The Ligue 1 club had an agreement with De Bruyne when he decided to leave Wolfsburg two years ago, but eventually decided to bring in Angel Di Maria from Manchester United instead.
However, De Bruyne is said to be 100 per cent committed to City, and particularly happy with life under Pep Guardiola, which is why club sources believe contract talks have progressed so smoothly in the last month.