Tevez told Telegraph Sport in May that he would leave but that he was keen to stay in England and now the 25-year-old faces a straight choice between City and Chelsea having rejected a five-year deal worth £110,000-a-week.
Related ArticlesUnited confirm Tevez lossTosic: We knew Ronaldo was offFootball fixtures 2009/2010Fixtures: Big Four clashesFootball must tame economicsSport on televisionCity are in pole position because of his desire to remain in the North-West but it is understood that Chelsea are ready to up their efforts to secure Carlo Ancelotti's first major signing.
Tevez's representative, Kia Joorabchian, told United chief executive David Gill that his client would not be accepting the club's contract offer just hours before the club's deadline of midnight on Friday.
A United statement said: "The club agreed to pay the £25.5m and offered Carlos a five-year contract. Disappointingly his advisers informed the club that he does not wish to continue playing for Manchester United."
Joorabchian insisted that Tevez would not consider joining Liverpool because of their rivalry with United. "[Tevez] has a lot of respect and a lot of love for the fans of Man United and I think he would rule Liverpool out. City and Chelsea probably would be the two clubs that are on the table," he said.
Joorabchian said a decision would be made by the first week in July and that there would be no future issues over who owned the player's rights because the next deal would be a permanent one.
City, who should complete the £16.5m signing of Roque Santa Cruz from Blackburn tomorrow, are prepared to pay Tevez £140,000-a-week, but Chelsea think they can hijack the deal.
United will move quickly to replace Tevez and Lyon are now bracing themselves for a bid for Benzema. Lyon sporting director Bernard Lacombe said: "He [Benzema] is with us, but nobody knows what will happen."