Roberto Mancini is keen to bolster his attacking line-up when the transfer window re-opens for business on January 1.
Top of his City wish-list is Bosnia international Dzeko who is eager to quit Steve McClaren's side for Eastlands after issuing a 'come and get me' plea to Mancini earlier this month.
Carroll service: Manchester City have revealed they are interested in the Newcastle striker
The Italian identified the 24-year-old as the man he wants in the January window but was deterred by the Bundesliga's prohibitively high demands, understood to be in the region of £38million.
But after Mancini publicly revealed his admiration for England star Carroll for the first time, following City's 3-1 win at St James' Park on Boxing Day, Wolfsburg caved in on their rich demands.
Although Wolfsburg are desperate for Dzeko to stay and help improve under-fire boss McClaren's struggling fortunes in the New Year, they don't want to lose out on a potential multi-million windfall for the striker.
Top target: Wolfsburg striker Edin Dzeko has long been admired at Eastlands
German daily Bild reports that Wolfsburg are now willing to do business for around £25.5m for City to do the deal.
Second-placed City's transfer record stands at £32.5m, paid for Robinho in 2008. However, Mancini has told his chairman Khaldoon Al Mubarak that Dzeko could be the difference between finishing first and fourth in the Premier League this season.
Mancini, meanwhile, continues to monitor Carroll's impressive progress.
Hands off: Newcastle boss Alan Pardew is eager to resist any bids for his star man Carroll in the January transfer window
The striker has scored 11 goals in Newcastle's return to the top flight this season and celebrated his first international cap at Wembley against France in November.
Newcastle boss Alan Pardew has warned off potential suitors for the powerful 21-year-old hitman, with Tottenham also circling, and Mancini told Italian reporters yesterday: 'Carroll is a good player.
'He's young, he's strong, he's very good. But I don't think that Newcastle want to sell.'
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