Wolfsburg were happy enough with the financial terms of a deal that will smash the Bundesliga transfer record after City pledged around £28million up front, with extras for Champions League qualification taking the overall amount to close on £35m.
City have now indicated they are prepared to include out-of-favour striker Santa Cruz in the equation, as under-pressure Wolfsburg manager Steve McClaren responds to the challenge of building a new team by weighing up the options for reinforcing his front line.
Come and get me: Dzeko is on the verge of leaving Wolfsburg for Manchester City
Lazio had agreed to take Santa Cruz on loan for the rest of the season with a view to a permanent summer deal, but the Paraguay international was not prepared to uproot his family to Italy without the guarantee of a long-term move.
Lazio president Claudio Lotito said: 'We take into account Santa Cruz's reaction and his desire to make any transfer permanent. We are aware of this and consider it a wise decision for him.'
As negotiations continued with Dzeko's agent over personal terms, it emerged that the 24-year old will earn nearly £6million a year, plus a hefty bonus, should City qualify for the Champions League.
Despite reports in Italy that Juventus could make a last-ditch bid, sources close to the deal insisted City and Wolfsburg should formalise their agreement by the end of the week.
On the move: Santa Cruz (right) may never be seen again in a City shirt
The Bosnia frontrunner would then be in line to lead City's attack in a high-profile debut against Arsenal next Wednesday.
Turin newspaper Tuttosport claimed Juventus were plotting a late hijack deal that would involve Wolfsburg keeping Dzeko till the end of the season. The Italians would allow £8m-rated former Liverpool midfielder Momo Sissoko join the club on a free next month and then offer a fee plus Brazilian-born striker Amauri in June.
Juve have long known they cannot compete with City's spending power, but have pursued Dzeko since the summer in the hope that their prestige would be more important than money.
Reports in Italy have always suggested he preferred a move to Serie A, which for many years was seen as the superior league in former Yugoslavian countries, though Sportsmail revealed before Christmas that Dzeko had actually written to City in the summer to say he wanted to come.
Edin for the top: Mancini backs Dzeko to fire Manchester City to titleMan City close in on Dzeko as £30m striker is primed for debut at ArsenalBarca fight to keep teen ace Alcantara away from Man City and Chelsea Bordeaux chief admits Man City could be closing in on midfielder DiarraWe'd be happy to have Man City sulker Balotelli at AC Milan, admits AllegriCongolese man gets 24 years in prison for deadly gun attack on Togo football team in Angola Milan offer Ronaldinho at bargain £7m in bid to attract Chelsea and Man CityMANCHESTER CITY FC