Though City would rather hang on to the promising 19-year-old striker, they have privately accepted that he will leave Eastlands at the end of the month, according to a report in the Guardian newspaper.
Hart, who has seen his first team opportunities dry up completely since the arrival of former Newcastle United goalkeeper Shay Given in January, has concluded that his only chance of forcing his way back in to Fabio Capello's thoughts for the World Cup next year would be a fresh start at another Premier League club.
Hart, 22, who made his debut for the national team in a June 2008 friendly against Trinidad and Tobago, has opened talks with Birmingham over a proposed loan deal, with a view to a permanent contract in a year's time.
City attempted to secure Sturridge's long-term future at the club with the offer of a new, £45,000-a-week deal but the player turned that down to instead talk to Chelsea about a move as a free agent.
With no transfer fee to pay Chelsea would be willing to go to £75,000-a-week, making Sturridge the best paid teenager in the Premier League.
As the forward is under the age of 24, City would be entitled under Premier League rules to a 'development fee', set by an FA tribunal.
Sturridge has been in the City youth set up since the age of 13 and so the club have a good case for a large settlement.
In putting together their submission for the tribunal, City staff will look at Theo Walcott's fee when he left Southampton for Arsenal – £5m rising to £12.5m – and the recent transfer of Fraizer Campbell from Manchester United that cost Hull City £6m.